Understanding Interest Rates and Percent Growth
Explore the concepts of interest rates, percent growth, and lending deals through scenarios with Pete the troll under the Brooklyn Bridge. Learn about different lending options, how interest impacts finances, and ways to maximize returns when lending money. Discover equations and methods to calculate interest rates and total money after a specified period. Create assessment questions related to percent increase, decrease, and interest for a comprehensive understanding of the topic.
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Presentation Transcript
Calculating Interest Rates Interest and Percent Growth
Petes Deal Pete the troll lives under the Brooklyn Bridge. He offers passers by the following deals to choose from: If you let him borrow $100 for one month, he will give you back your original $100 plus an additional $5. If you let him borrow $200 for one month, he will give you back your original $200 and an additional $9. Which is the better deal and why? Interest and Percent Growth
Another Deal After learning about Pete the troll, you go to the Brooklyn Bridge with $1,000, hoping to let Pete borrow it and make some money. However, this time when you arrive, there are a total of 10 trolls and each of them is offering the same pair of deals as Pete! How should you best lend your money to the trolls to make sure you have the most money possible at the end? Interest and Percent Growth
Interest Interest: Money paid regularly, at a particular rate for the use of borrowed money. As an adjective: I m no longer making any interest payments. Interest rate: The price paid for using someone else s money, expressed as a percentage of the amount borrowed. We use specific terminology for interest when borrowing and investing: When you invest, you earn interest earning interest is a form of income. When you borrow, your loan accrues interest accruing interest is a form of expense. Interest and Percent Growth
Using Equations Add the interest rate and 100% (100% + r%). Find (100 + r)% of the principal. Find r% of the principal. Add r% of the principal to the principal. Interest and Percent Growth
Using Principal as 100% Two ways to find total money after one year: Add the interest rate to 100% (r% + 100%) Both percents are describing parts of the same whole. You can only add percents when they are describing parts of the same whole. Applying the total percent (r% + 100%) to the principal will result in the total dollars. Find the part of the whole principal r% described in dollars and add the quantity to the principal given in dollars In this case, the quantities being added are given in dollars. Interest and Percent Growth
Assessment Create three questions on percent increase/decrease similar to those in today s lesson At least one question must be related to interest Include the answers to your questions Use appropriate terms/vocabulary in your questions and answers Interest and Percent Growth
