Class 3 8-29 - Class 3 - Interest ISE 2014 Click to edit...

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Click to edit Master subtitle style Class 3 - Interest ISE 2014 Monday August 29th
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Origins of Interest Some of our oldest records of interest come from the ancient city of Sippar1
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Origins of Interest Clay tablets were used to record transactions of tools, animals, or other goods2 Interest was considered the “fee” for using these commodities
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Origins of Interest Most of these transactions involved what we would call simple interest A person would agree to pay one amount for the goods themselves ( principal ) This was followed by a rate based on how long they kept the goods or how long until they re-paid the principal ( interest )
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Simple Interest The modern way of showing this (Section 4.2 in your book) is to express interest as a percent rate of the principal I = (P)(N)(i) I = Total interest P = Principal N = Number of periods
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Simple Interest Example: Your roommate wants to borrow your car to drive home to visit his family He doesn’t know how many days he’ll be gone You don’t have any urgent need for your car,
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Example To sweeten the deal, your roommate says he’ll pay you $50 to borrow your car, plus $5 for each day he’s gone He comes back after 6 days and is ready to pay you for borrowing the car…
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Class 3 8-29 - Class 3 - Interest ISE 2014 Click to edit...

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