Section 1

Connect

 

Going Beyond

 

For short-term investments or loans for which the term is given in days, 360 days are used instead of 365 days to mentally estimate the interest.

 

For instance, estimate the simple interest on a 60-day GIC. The principal is $3000, and the interest rate is 2% per annum.

 

P = $3000

 

 

r = 2% = 0.02

 

 

The interest is about $10.

1. Use 360 days in a year to approximate what fraction of a year is included for each term.
   
   
   1. 90 days
   2. 45 days
   3. 30 days
      
      
2. Calculate the difference between an estimate and the actual simple interest on a 90-day GIC if $4000 is invested and the interest rate is 2.5%.

Project Connection

The project for this section involves investigating interest on investments and loans.

 

Begin working on Steps 1 and 2 of the Section 1 Project: Capturing Your Interest! Make sure to save all your project work in your course folder to submit at the end of Section 1.

 

Lesson 1 Assignment