How can compound interest help you?
As we have seen, compound interest can have great power. But it is a double-edged sword, what can go up... Can also go down. In the following examples use the prior given formula, show all work, and each question will be worth 4 marks for a total of 8. If you have any questions don't hesitate to contact me. Work can be submitted online as either a picture of your physical work or a document that still clearly outlines the process that you used.
1) What are some ways that compound interest can benefit you? Say you had 10,000 dollars at 18 years old, what do you think you should do with it? Find an example online, and predict what it could earn you after 10 years.
- Determine the interest rate
- How frequently it is compounded.
- What it would earn you with an initial investment of 10,000.
2) How can compound interest hurt you? Can you think of some potential financial pitfalls that only get worse over time? Find a loan or form of debt online and...
- Determine it's interest rate.
- How frequently it is compounded...
- Say your principal was 10,000. What would the sum be after 1 year, 5 years, and 10 years?