Simple Interest
years
Compound interest is a linear, quadratic, or exponential function?
exponential
i is the interest rate per _____
compound period
What is gross pay?
Pay before deductions
Draw the formula triangle for simple interest
I
PRT
Simple interest goes up ______ than compound interest
slower
A=P(1+i)^n , What does A represent?
Total amount
n is the number of __________
compound periods
What is the name of the money you get in your bank account after deductions
net pay
What are two things you can do to pay less money in interest for a loan on your car
Decrease the term, put more money down
Re arrange your simple interest equation for r
What will increase faster: 10%/a compounded quarterly or monthly?
monthly
12% compounded monthly
1%=0.01
55,000/0.75= $73,333
If you are laid off from your job. To supplement your income in between jobs.
What does this equation represent?
A=P+I
A $2,920 investment is compounded at 10%/a quarterly for 3 years. What is it worth at the end?
A=2920(1+0.025)^12= $3,927
10 years compounded daily
10 x 365 = 3,650 = n
What of the 4 major deductions is the smallest on someone's paycheque
EI=Employment Insurance
Using the rule of 72. How long will it take for an investment with a 6% interest rate to double?
12 years.
How much would someone need to invest to earn $200 in simple interest in 260 days at 8%/a.
P=I/rt=(200)/(0.08)(0.71)=$ 3,521
You invested in a stock that paid 8.4%/a compounded monthly. At the end of 4 years that investment was worth $2795.40. What was your initial investment?
PV=(2795.40)/(1+0.007)^48 = $2,000
i=20/4=5% or 0.05
You make $20/hr. You always work 8 hour shifts. What would your NET pay be if:
-You worked a typical week
-You worked an overtime shift on Saturday (time and a half)
-25% of your pay is deducted on your paycheque
(20 x 8) x 5 days= $800
(20 x 1.5) x 8 hours = $240
Total = 800 + 240 = 1,040
NET= 1,040 x 0.75 = $780
How much would you need to make per year to "afford" a $4000/mo mortgage payment.
(4000 / 0.45) x 12 = $106,600