Lesson #44
Compound Interest
and Quiz on Logs

Quote of the Day:
"St. Augustine had good insight on the division of labor between God and his children when he wrote that we should work as if everything depended on our efforts and pray as if everything depended on the Almighty."

Objectives:
The student will apply the definition of e to compound interest.

The student will compute the number of years for an investment to double.

The student will compute the amount of an investment given the principal, rate and length of the investment.

1. Go over homework and collect it.

2. Discuss Compound Interest.

Let R = Interest Rate per period
Let P = Principal.
Let n = number of periods





3. Examples:



4. To Compute Effective Annual Yield

Use one of the compound interest formulas.

Find the amount of an investment of $1 for 1 year and then subtract the dollar.

Examples:
Compute the E.A.Y. for the following:

4% compounded continuously:
E.A.Y. = .040810

4 1/8% compounded quarterly:
E.A.Y. = .04189

4 1/4% compounded semiannually:
E.A.Y. = .04295

5. Worksheet on Rule of 72

6. Quiz on Logs

7. Assignment:
Worksheet on Rule of 72
Review Sheets for Mini Examination #2
Worksheet on compound interest problems

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Send any comments or questions to: David Pleacher