Compound+Interest

=Recently, we were introduced to the exponential form, and how to evaluate and graph functions that involved rates that doubled, tripled or quadrupled. =

Review those skills by answering the following questions:
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=__Compound Interest__= =Banks set a rate of growth for savings accounts, or the annual percentage rate (APR). They also set rules about how the account grows in value. = ==The exponential form that we are familiar with can be used in determining what an ending balance would be after a certain number of years, given an APR. However, the percentage rate must be must be converted accordingly to work with the exponential form. == ==With a partner, use Table 1 of the spreadsheet to answers questions #1 – 6 on the Compound Interest Worksheet. ==

=__More Frequent Compounding__= =Generally, banks do not calculate compound interest annually. They may compound the interest semi-annually, quarterly or monthly. To calculate compound interest, you divide the annual percentage rate of interest into equal parts. Then number of parts equals the number of times you calculate interest during the year. =

==With a partner, refer to Table 2 of the spreadsheet “Compound Interest” and use the Compound Interest Simulator found below to answers questions #7 – 12 on the Compound Interest Worksheet . ==