5. How Much Interest Was Earned?

Display Slide 1. Ask students what they think substance interest is. Tell them that this lesson is approximately compound interest and exactly how it can help and harm you. Display Slide 2. Ask students to learn the information on the slip. Explain that saving is disposable income (income after taxes) minus consumption spending (investment property on goods and services). Point out that, like Desmond just, people save to have the ability to buy things in the foreseeable future.

Discuss: 1. What does Desmond need it in the future? 2. Which option should Desmond choose and why? 100 every Saturday mowing lawns. Display Slide 3 and review. Tell students that interest is the money that individuals pay to borrow money or the amount of money that people earn when they spend less.

725 into a checking account that gives 2.3% simple annual interest. Just how much interest will Dianna earn after 1. 5 years? Display Slide 5. Explain that easy interest is interest paid only on the initial principal. Explain that the problem is to determine how much interest Dianna will earn on her preliminary deposit after 1. 5 years. Tell students that 18 months is written as 1.5 years and the interest rate is 2.3%, which is written as 0.023. Walk the learning students through the formulation for simple interest to resolve the problem. Display Slide 6. Ask students to resolve the nagging problem using the easy interest formula.

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  • Since you required 10 from the 7 in 474, you must subtract 1 from the 7 to get 6
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  • Which of the next does NOT signify cash outflows to the company

Discuss the answers as a class. 1. What number did you use for it? 2. What quantity did you use for r? 3. What quantity did you utilize for t? 4. Did you have to improve “t” two years? No, it was already years. 5. Just how much interest was gained?

Display Slide 7. Explain that compound interest is interest that is gained on both the principal and any interest that has been gained previously. Give some examples of how chemical substance interest impacts people. Compound interest is gained on many checking account deposits at banking institutions and credit unions; compound interest is earned on annuities, that are insurance products; compound interest is paid on unpaid credit card balances, on car loans, and on mortgages.

Explain that interest can be compounded over different measures of time. Compounded each year means that the interest is computed and added at the end of every yr. Compounded semi-annually (twice a year) means that the interest is computed and added every half a year. Compounded quarterly (four times a 12 months) means that by the end of each quarter (90 days) interest is computed and added. Compounded regular monthly means that interest is computed and added at the end of every month. Tell students they are going to view a video and ask them to listen for how people can make their money grow.

When the video is finished, discuss the next: 1. What company insures the amount of money in people’s bank or investment company accounts? 2. What is the best arrange for building your keeping? 3. What do the purchase price is named by us people purchase using someone else’s money? 4. What is the amount of money deposited into a bank account that pays interest called initially?

5. Why do you think banks pay interest? Because the deposits are utilized by them to make loans to other customers. 6. When was the young woman in the video better off – when she started conserving early or when she waited to save? 7. When did she earn more interest? 8. How do cut down regularly benefit her?