Quick SelfAssessment Grab a piece of rough paper

Quick Self-Assessment • Grab a piece of rough paper and answer the following: àWhat is compound interest? àWrite one difference between compound interest and simple interest?

Compound Interest Simple Interest Compound Interest Calculated at a fixed rate on the principal amount Calculated at a fixed rate on principal amount + interest Remains the same every year! Interest changes every year! Principle amount changes every year

Compound Interest • Find the compound interest on € 3000 invested for 2 years at 5% per annum. Principal Year 1 € 3000 Year 2 € 3000 + € 150 = € 3150 Interest 5% of € 3000 = € 150 5% of € 3150 = € 157. 50 New Principal Total interest = € 150 + € 157. 50 = € 307. 50

Shortcut Compound Interest Formula •

P Example n r € 1000 is invested for 3 years at 5% p. a. compound interest. Find: a) The new amount invested after 3 years b) the compound interest

Final amount after 3 years Compounded interest after 3 years

Alfred invests € 15000 at 6% p. a. compound interest for 2 years. Calculate the new amount invested

Final amount after 2 years No need to find interest

Classwork – Peer Assessment STP 9 Pg 97 No. 1 - 7 • Very straight forward • Find the Compound Interest • Write the formula EACH time • Swap copybooks • Correct each others’ work – give positive feedback and something your partner can improve on!