Financial mathematics: Use simple and compound interest to explain and define a variety of situations
Subject outcome
Subject outcome 5.2: Use simple and compound interest to explain and define a variety of situations.
Learning outcomes
- Construct and make use of timelines to solve problems relating to finance.
- Use the simple growth formula [latex]\scriptsize A=P(1+i.n)[/latex] to solve real life problems.
- Use the compound growth formulae [latex]\scriptsize A=P{{(1+i)}^{n}}[/latex] or [latex]\scriptsize {{A}_{t}}={{A}_{0}}{{\left( {1+\displaystyle \frac{r}{{100\times m}}} \right)}^{{t\times m}}}[/latex] to solve problems subject to the following compounding:
- annually
- semi-annually
- quarterly
- monthly
- daily.
Range: unknown values to calculate will only include [latex]\scriptsize A,P[/latex] and [latex]\scriptsize i[/latex].
Unit 1 outcomes
By the end of this unit you will be able to:
- Use the simple growth formula to solve problems related to finance.
- Solve for [latex]\scriptsize A,P,i[/latex] and [latex]\scriptsize n[/latex] using the simple interest formula.
Unit 2 outcomes
By the end of this unit you will be able to:
- Use the compound growth formula (or compound interest formula) to solve problems related to finance.
- Solve for [latex]\scriptsize A,P[/latex] and [latex]\scriptsize i[/latex] using the compound interest formula.
Unit 3 outcomes
By the end of this unit you will be able to:
- Interpret financial questions using timelines.
