Speed Calculation of Interest and Percentages Interest: Interest tells us how much a principal amount of money changes over time. We calculate interest u...
Interest: Interest tells us how much a principal amount of money changes over time. We calculate interest using specific formulas based on the time period and interest rate.
Percentage: A percentage is a ratio of two numbers that expresses a part of a whole. We calculate percentages by dividing a part by the whole and multiplying the result by 100.
Calculating Interest:
Interest = Principal amount x Interest rate x Time period
Compound Interest = Principal amount x (1 + Interest rate)^Time period
Calculating Percentages:
Percentage of a Number: To calculate the percentage of a number, we divide the part by the whole and multiply the result by 100.
Percentage Increase or Decrease: To calculate the percentage of increase or decrease between two numbers, we subtract the initial value from the final value and divide the result by the initial value.
Examples:
Simple Interest:
Interest = 5
Compound Interest:
Compound Interest = 128.44
Percentage of a Number:
Percentage of Interest = $200 x 0.02 = 4%
Key Points:
Interest and percentages are closely related concepts.
Understanding how to calculate interest helps us calculate the future value of investments.
Understanding how to calculate percentages helps us analyze the impact of changes in both the numerator and denominator of a fraction