# 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 $\scriptsize A=P(1+i.n)$ to solve real life problems.
• Use the compound growth formulae $\scriptsize A=P{{(1+i)}^{n}}$ or $\scriptsize {{A}_{t}}={{A}_{0}}{{\left( {1+\displaystyle \frac{r}{{100\times m}}} \right)}^{{t\times m}}}$ to solve problems subject to the following compounding:
• annually
• semi-annually
• quarterly
• monthly
• daily.

Range: unknown values to calculate will only include $\scriptsize A,P$ and $\scriptsize i$. ### 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 $\scriptsize A,P,i$ and $\scriptsize n$ 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 $\scriptsize A,P$ and $\scriptsize i$ using the compound interest formula. ### Unit 3 outcomes

By the end of this unit you will be able to:

• Interpret financial questions using timelines. 