Why learn about finance?
Why study interest formulas?
You’re in the market for a new refrigerator, but don’t have a lot of cash on hand to make the purchase. A flyer from an appliance rent-to-own store arrives in the mail one day, containing a very tempting offer: the refrigerator of your dreams for only $17.99 per week!
The other two scenarios involve interest formulas. We will revisit this scenario to see which offer is the best deal after taking a look at the other options. In this module, you will learn two ways to calculate interest; simple and compound. Understanding interest rates will help you become a more informed consumer, potentially saving you a lot of money on big purchases such as appliances, cars and even your home.
Learning Objectives
Simple and Compound Interest- Calculate future value and payments for savings annuities problems
- Calculate present value and payments for payout annuities problems
- Calculate present value and payments for loans problems
- Determine the appropriate financial formula to use given a scenario by recognizing key words and examining frequency of deposits or withdrawals, and whether account is growing or decreasing in value
- Analyze a home mortgage refinance scenario, forming judgments by combining calculations and opinion
- Solve a financial application for time using logarithms