This document is a lesson on simple and compound interest. It begins with an introduction and then defines the formulas for simple and compound interest. For simple interest, the formula is Interest = Principal x Rate x Time. For compound interest, the formula is Amount = Principal x (1 + Rate/Number of times compounded)^(Number of times compounded x Time). The document provides examples of calculating simple and compound interest based on investing or saving different principal amounts over various time periods at given interest rates. It concludes by assigning homework to calculate the amount of interest earned on an account over 2 years.

1. Welcome
Md. Abdul Quddus
Department: Mathematics
Campus : 05

2. Chapter : Two
Lesson declaration

3. SIMPLE
AND
COMPOUND
INTEREST
Since this section involves what can
happen to your money, it should be of
INTEREST to you!

4. Simple & compound
profit
Todays Lesson

5. Annual interest rate
IMPLE INTEREST
FORMULA
Interest paid
Principal
(Amount of money
invested or
borrowed)
Time (in years)
100
I = PRT

6. If you invested $200.00 in an account that paid
simple interest, find how long you’d need to
leave it in at 4% interest to make $10.00.
10 = (200)(0.04)T
1.25 yrs = T
enter in formula
as a decimal I = PRT
100
Problem

7. COMPOUND INTEREST
FORMULA
amount at the
end
Principal
(amount at
start)
annual interest rate
(as a decimal)
nt
n
r
PA 





 1
time
(in years)
number of times per year
that interest in compounded

8. nt
n
r
PA 





 1500
.08
4
4 (2)
83.585fA 
Effective rate of interest is the equivalent annual simple rate of
interest that would yield the same amount as that made
compounding. This is found by finding the interest made when
compounded and subbing that in the simple interest formula and
solving for rate.
Find the amount that results from f500 invested at
8% compounded quarterly after a period of 2
years.

9. Now try
You have f 5000 in a savings
account earning 3% interest.
How much interest will you earn in 2
years?
Profit & Loss

10. Home work
 Theresa deposited $5000 into a savings
account that pays a 3% interest compounded
monthly. If she withdraws the money in 2
years, how much will she have?

11. Thank you