Ch13 - MGF 1107 Lecture Outline NOTE: YOU WILL NEED THE...

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MGF 1107 – Lecture Outline NOTE: YOU WILL NEED THE SUPPLEMENTS FROM YOUR TEXTBOOK AFTER WE COMPLETE SECTION 13.3. THERE ARE NO OUTLINES FOR THESE SECTIONS – WE WILL WORK THROUGH THEM TOGETHER. Unit II – Consumer Mathematics and Tax Basics (Chapters 13 and Text Supplement) Chapter 13 – Consumer Mathematics – Buying and Saving These Notes are taken from A Mathematical View of our World , Parks, Musser, et. al., 1 st custom ed., Thomson Publishing and the accompanying Instructor’s Resource CD. All rights reserved by the publisher. Sec 13.1 – Simple and Compound Interest Goals o Study simple interest o Calculate interest o Calculate future value o Study compound interest o Calculate future value o Compare interest rates o Calculate effective annual rate If P represents the principal, r the annual interest rate expressed as a decimal, and t the time in years, then the amount of simple interest is: For a simple interest loan, the __________________ of the loan is the principal plus the interest. If P represents the principal, I the interest, r the annual interest rate, and t the time in years, then the future value is: ___________ interest simplifies calculations by using 2 conventions: Each month is assumed to have 30 days. Each year is assumed to have 360 days. 1
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____________ interest is based on the 365-day year calendar. Work Homework #2b; #4a,c; #7 (pg 812) Reinvesting the interest, called , makes the balance grow faster. To calculate compound interest, you need the same information as for simple interest plus you need to know how often the interest is compounded. EXAMPLE: Determine the balance each year for 3 years on a $100
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Ch13 - MGF 1107 Lecture Outline NOTE: YOU WILL NEED THE...

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