Interest is calculated once per year on the = the interest earned after t years Simple original amount borrowed or invested. The = the principal amount (amount borrowed or Interest interest does not become part of the invested) amount borrowed or owed (principal). = interest rate in decimal form = the future value Interest is calculated once per period on = the present value Compound the current amount borrowed or invested. Interest Each period, the interest becomes part of = interest rate as a decimal the principal. = the number of times compounded per year = time in years Kyra has been babysitting 6th grade. She has saved $1000 and wants to open an account at the bank so that she will earn interest on her savings. Simple Bank pays simple interest at a rate of 10%. How much money will Kyra have after 1 year? After 2 years, if she does not add money to her account? Think about it like this: This diagram $1000 invested at 10% interest for 1 year. This diagram shows $1000 invested at 10% interest for 2 years. How much money does she have after 5 years? 1. Raoul needs $200 to start a snow cone stand for this hot summer. He borrows the money from a bank that
Simple Interest Interest is calculated once per year on the original amount borrowed or invested. The interest does not become part of the amount borrowed or owed (principal). = the interest earned after t years = the principal amount (amount borrowed or invested) = interest rate in decimal form Compound Interest Interest is calculated once per period on the current amount borrowed or invested. Each period, the interest becomes part of the principal. = the future value = the present value = interest rate as a decimal = the number of times compounded per year = time in years Kyra has been babysitting 6th grade. She has saved $1000 and wants to open an account at the bank so that she will earn interest on her savings. Simple Bank pays simple interest at a rate of 10%. How much money will Kyra have after 1 year? After 2 years, if she does not add money to her account? Think about it like this: This diagram $1000 invested at 10% interest for 1 year. This diagram shows $1000 invested at 10% interest for 2 years. How much money does she have after 5 years? 1. Raoul needs $200 to start a snow cone stand for this hot summer. He borrows the money from a bank that