Section 1
1. Section 1
1.18. Explore 3
Section 1: Simple and Compound Interest
Consider Ravia’s investment again. Ravia asked her bank to see what the final investment would have been if the interest were compounded with different compounding periods.
Try This 2
Use the Compound Interest Formula applet to investigate the effects on changing the compounding periods on Ravia’s investment. As you work through the applet, fill in the chart provided in question 1.
- Fill in the chart using the information from Ravia’s $1000 investment.
Compounding Period Number of Compounding Periods Total Amount Interest Earned Annually Semi-annually Quarterly Monthly
- Explain why there are 10 compounding periods when you invest semi-annually.
- Explain why there are 60 compounding periods when you invest monthly.
Save your work to your course folder for reference in Share 2.
Share 2
Did You Know?
You can download compound interest calculators on the Internet. Simply use the search phrase “compound interest calculator.”
With a partner or group, discuss this question based on Try This 2.
- What do you notice about the effect of different compounding periods on interest earned?
Summarize your discussion by creating a statement that describes the effect of different compounding periods on the interest earned.
Save this statement to your course folder.
This was answered in the applet.
This was answered in the applet.