Compound Interest

Warm Up 6 (2.7.2014) 1. Simplify: a) b)

2.

Write an explicit model for the table.

0523 ydxd 3524 yx

Hours 0 1 2Bacteri

a5 10 20

HW 5.8 Check 1. Arithmetic, 12, Difference=6, 8

weeks2. Geometric, 500, Ratio=2,

20480003. A) 4, 16, 64, 256, 1024B) r=4C) Next = Now*4D)

Quiz

Compound Interest When compounded Annually:

y = a (1 + r )t

COMPOUND INTEREST FORMULA when not compounded annually

amount at the end

Starting amount

annual interest rate(as a decimal)

nt

n

ray

1

time(in years)

number of times per year that interest in compounded

Works for compounded annually as well

n= 1 when compounded annually

nt

n

ray

1

What can n be?Interest

compounded….What is n?

Annually

Semiannually

Quarterly

Monthly

Daily

nt

n

rPA

190

0

.06

12

(12•

3)

EX 1: Find the amount that results from $900 invested at 6% compounded monthly after a period of 3 years.

MAKE sure you the EXPONENT in ( )!!! (when you put in the calculator!)

01.1077$A CHANGE THIS PROBLEM ON YOUR PAPER!!!!!!

nt

n

rPA

150

0

.08

4

4 (2)

83.585$A

EX 2: Find the amount that results from $500 invested at 8% compounded quarterly after a period of 2 years.

MAKE sure you SIMPLIFY the EXPONENT FIRST!!!! (before you put in the

calculator!)

Example 3:Suppose you invest $32,000 into an account

that has an annual interest rate of 5.2% compounded quarterly for 3 years. Find the total amount after 3 years.

Complete The practice problems in pairs! But each student should work out every problem!

Warm-Up 61. A pair of jeans cost $25.99, and the sales tax is

7%. Use the formula C = p + rp to find total cost of the jeans, where C is the total cost, p is the price, and r is the sales tax rate.

2. Evaluate: 3xy – 10x where x = -3 and y = 5

3.Write and solve an equation to model the word problem: You borrow $60 to buy a bread making machine. You charge customers $1.50 a loaf for your special bread. If you want to make a profit of $100, how many loaves of bread must you sell? Write a function rule to describe your profit as a function of the number n of loaves sold.