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Thurs, 4/15/10 SWBAT…apply exponents

Thurs, 4/15/10 SWBAT…apply exponents . Agenda Workshops: Compound interest & Depreciation HW: Work on projects. Compound Interest. Compound interest is interest earned or paid on both the initial investment and previously earned interest. A = the current amount

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Thurs, 4/15/10 SWBAT…apply exponents

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  1. Thurs, 4/15/10 SWBAT…apply exponents Agenda • Workshops: Compound interest & Depreciation HW: Work on projects

  2. Compound Interest • Compound interest is interest earned or paid on both the initial investment and previously earned interest. A = the current amount P = the principal or the initial amount r = the annual interest rate expressed as a decimal n = the number of times the interest is compounded each year t = time in years

  3. Compounding Periods • Interest compounded annually occurs once per year • Semi-annually occurs 2 times a year • Quarterly occurs 4 times a year • Monthly occurs 12 times a year

  4. INVESTMENTS Laura invested $6,600 at an interest rate of 4.5% compounded monthly. Determine the value of her investment in 4 years? Answer: About $7,898.97

  5. SALARY Ms. Keros received a job as a teacher with a starting salary of $47,000. According to her contract, she will receive a 4.5% interest rate every year. How much will Ms. Keros earn in 5 years? Answer: About $58,570.55

  6. Depreciation/ Exponential Decay • In exponential decay, the original amount decreases by the same percent over a period of time. y = the final amount a = the initial amount r = interest rate per year t = time, in years

  7. CARS Leonardo purchases a car for $18,995. The car depreciates at a rate of 18% annually. After 6 years, Manuel offers to buy the car for $4,500. Should Leonardo sell the car? Explain? Answer: No, the car is worth about $5,774.61

  8. INVESTMENTS Jim’s investment of $4,500 has been losing its value at a rate of $2.5% each year. What will his investment be worth in 5 years? Answer: About $3,964.93

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