8.

6 Problem
Solving:
Compound
Interests
Simple interest: I=prt

I = interest
p = principal: amount you start with
r = rate of interest
t= time in years
If you invest $3,000 at 5% for one year, how
much will you make for the year?

I = prt
= 3000  0.05  1
= 150
You made $150 for the
year.
Compound interest formula:
Compounding Periods
Annually 1
Semi-Annually 2
Quarterly 4
Bimonthly/Every 2 months 6
Monthly 12
Daily 365
Find the total amount in your account if
you start with $750 at 7.5% interest for
2.5 years.

= 750(1+0.075)2.5
= 750(1.075)2.5 (use a calculator here!)
= $898.63
 How much should you invest at
7% to have $200 after 5 years?

A = p(1+r)t (Plug in what you know.)

200 = p(1.07)5 (get p alone, then use a calculator.)

142.60= p
If today is your 14th birthday
and you put $100 in the bank
at 4% interest and leave it until
you are 60, how much money
will you have?

A = p(1+r)t
= 100(1.04)46
= 607.48
What about a mutual fund
that pays 10% interest?

A = p(1+r)t
= 100(1.10)46
= 8017.95
$100 is invested at 10% interest
compounded yearly for 6 years
$250 invested at 6.5% for 8 years
compounded monthly.
How much money would you need to deposit today at
9% annual interest
compounded monthly to have $12000 in the account
after 6 years?


If you deposit $5000 into an account paying 6%
annual interest compounded monthly,
how long until there is $8000 in the account?
