lec-10-7

lec-10-7 - Compound interest Say you invest $100 and make...

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1 ECS10 10/8 Compound interest ± Say you invest $100 and make 7% annually ± After one year you have: $100 + $100*7/100 = $107 You made $7 00 You made $7.00 ± If you leave it invested, and make another 7% the next year, you have: $107 + $107*7/100 = $114.48 You made $7.49 Compound interest ± The more you have the more you make e balanc Doubles every seven years. Debt and Payments ± Example debt: ± Beginning balance $1000 ± Interest rate 13% annually ± Make a payment of $300 per year ± After one year you owe: $1000+ $1000*13/100 = $1130 ($120 in interest) ± Then you pay $300, so you owe $1120-$300 = $870 ± The next year, you owe: $870 + $870*13/100 = 983.10$ ($113.10 in interest) ± Pay another $300, and get down to $683.10 New Assignment ± Given a debt amount, interest rate and monthly payment, figure out how long it takes to pay off the debt, and how much you end up paying in interest. “Compounded monthly”
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This note was uploaded on 01/14/2010 for the course ECS 10 taught by Professor Amenta during the Spring '07 term at UC Davis.

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lec-10-7 - Compound interest Say you invest $100 and make...

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