COMPOUND INTEREST COMPOUNDED ANUALLY YNP WHAT IS COMPOUND INTEREST ? -PRINCIPAL INCREASES BY THE INTEREST AMOUNT AT THE END OF EACH PERIOD. -principal_plus interest of one period becomes the principal for the next period. COMPOUNDING INTERVAL Interest earns InterestThe Compound Interest Formula HOW TO Amount Pe Ne UN eee A= P(1+n)” te hts) y as Number of times interest is compounded per year u 7 7 Number of A= Future Value of r= annual interest mesresel {| tant of ae the deposite rate (in decimal) Compounding Periods per | compounding, |" Perios ___Year,m | __ Period P= principal or = time in years. Annually | tyear Semiannuaily 2 S months amount of money Quarter 7 : iy) 4 | 3 months deposited n= number of times Monthly 2 T month compounded per year Daily 365, dayHOW TO CALCULATE COMPOIND INTEREST ? Example 1: If you deposit Php 4000 into an account paying 6! compounded quarterly, how much money will be in the account after 415) A =atno{ 1228) 4 A =4000(1.015)” A = 4000(1.346855007) Interest | Length of Each A = 5387.42 Seemed | ear | rand eee eee te After 5 years there will be PHP 5,387.42 inthe | —“sustmsal___}.__SonsETS TRY THIS! Example 2: If you deposit PHP 6500 into an account paying 8% annual interest compounded monthly, how much money will be in the account after 7 years?ETS TRY THIS! If you deposit Php4500 at 5% annual interest compounded quarterly, how much money will be in the account after 10 years?HOW TO CALCULATE COMPOIND INTEREST ? Example 3: How much money would you need to deposit today at compounded monthly to have Php 12000 in the account after 1216) 12000 = P 142.09 12 Pugin he ing infratin, FV = 1200, = 0.09, 0= 12000 = P(1.0075)”* potteniar deta exp asny ones pea 12000 = P(1.712552707) Dj and ond your fal amr dia are Comptuniing ‘compounding ue You would need to deposit Php 7007.08 to have Serio ‘casey ‘ Snot Php 12000 in 6 years. Menthiy [12]. roth \ foeETS TRY THIS! Example 4. How much money would have to be invested at 6% interest compounded weekly to be worth Php 15, 000 at the end of 15 years?ETS TRY THIS! How much money would you need to deposit today at 5% annual interest compounded monthly to have Php 20000 in the account after 9 years?Example 5: If you deposit Php 5000 into an account paying 6% annual interest monthly, how long until there is Php 8000 in the account? ssn) HOW TO CALCULATE COMPOIND INTEREST ? Plug inte giving information, FV = $000, P= S000, r= 0.06, and n= 12. a 00 = 500.05)" Use the order or operations to simplify the problem, Keep ee | ene fn dvi poole un al ap. i a Divide each side by 5000. fags | ifthmetee Aer sat 7 Take the logarithm of each side. Then use Property 5 to ren log 6= 24M 05 Tew he poblm as mahplcaton 6 iy log 005 Divide each side by log 1.005, suasssen 119 Use acaeulatorto find og 1.6 divided by log 1.005 It will take approximately 7.9 years for the Finish solving the problem by dividing each side by 12 and round your final answer. account to go from Php 5000 to Php 8000 gf ~XETS TRY THIS! Example 6: If you deposit Php 4000 into an account paying 9% annual interest compounded monthly, how long until there is Php 10 000 in the account?ETS TRY THIS! If you deposit Php 6000 into an account paying 6.5% annual interest compounded quarterly, how long until there is Php 12600 in the account?ETS TRY THIS! : If you deposit Php 5000 into an account paying 8.25% annual interest compounded semiannually, how long until there is Php 9350 in the account?