1

Series

Series

5.9 Compound Interest (1/4)

Compound Interest grows as a Geometric Series

n

100r1PA

AA = Value of AnnuityAnnuityCompound Interest

Ending Money

PP = PrincipalPrincipalStarting Money

rr = Interest RateInterest Rateper Time Period

nn = Number of Number of Time PeriodsTime Periods

2

Series

Series

5.9 Compound Interest (2/4)$10 000 is invested for 3 years at 8%

A = P(1 + )r100

A = 10 000(1 + )38100

= 10 000 x 1.083

= $12 597.12

I = $12 597.12 – 10 000

I = $2 597.12

3

Series

Series

5.9 Compound Interest (3/4)

Fry remembers he had a bank account back in the twentieth century. Surprisingly his old bankaccount is still active, and has been accruing interest for the past thousand years, bringing the balance from 93 cents to $4.3 billion

Was the interest rate really 2¼%?

Futurama Episode – April 27Futurama Episode – April 27thth 1999 1999A Fishful of Dollars (S1/E6)A Fishful of Dollars (S1/E6)

Video ClipVideo Clip

4

Series

Series

5.9 Compound Interest (4/4)

n

100r1PA

Futurama Episode – April 27Futurama Episode – April 27thth 1999 1999A Fishful of Dollars (S1/E6)A Fishful of Dollars (S1/E6)

A = $4 300 000 000P = $ 0.93

n = 1 000 years

0000003004100r193.0

1000

9146556234100r1

1000

100010001000

9136556234100r1

929503022.1100r1

.a.p%25.20225.0r

Video ClipVideo Clip