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3-4 EXPLORE COMPOUND INTEREST

3-4 EXPLORE COMPOUND INTEREST. OBJECTIVES. Understand the concept of getting interest on your interest. Compute compound interest using a table. compound interest annual compounding semiannual compounding quarterly compounding daily compounding crediting. Key Terms. Example 1.

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3-4 EXPLORE COMPOUND INTEREST

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  1. 3-4EXPLORE COMPOUND INTEREST OBJECTIVES Understandthe concept of getting interest on your interest. Computecompound interest using a table.

  2. compound interest annual compounding semiannual compounding quarterly compounding daily compounding crediting Key Terms

  3. Example 1 How much interest would $1,000 earn in one year at a rate of 6%, compounded annually? What would be the new balance?

  4. Example 2 Alex deposits $4,000 in a savings account that pays 5% interest, compounded semiannually. What is his balance after one year?

  5. EXAMPLE 3 How much interest does $3,000 earn in six months at an interest rate of 4%, compounded quarterly? What is the balance after six months?

  6. EXAMPLE 4 How much interest does $1,000 earn in one day at an interest rate of 6%, compounded daily? What is the balance after a day?

  7. CHECK YOUR UNDERSTANDING How much interest does x dollars earn in one day at an interest rate of 5%, compounded daily? Express the answer algebraically.

  8. Example 5 Jennifer has a bank account that compounds interest daily at a rate of 3.2%. On July 11, the principal is $1,234.98. She withdraws $200 for a car repair. She receives a $34 check from her health insurance company and deposits it. On July 12, she deposits her $345.77 paycheck. What is her balance at the end of the day on July 12?

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