PDF Compound Interest - Texas Instruments

? Teachers Teaching with Technology (Scotland)

Teachers Teaching with Technology T3 Scotland

Compound Interest

and other problems of a similar nature

?Teachers Teaching with Technology (Scotland)

COMPOUND INTEREST and other problems of a similar nature

Aim

To demonstrate how the TI-83 can be used to carry out Compound Interest type problems.

Objectives

Mathematical objectives By the end of this topic you should be able to

? Calculate compound interest, discounts and other calculations involving repeated operations

Calculator objectives By the end of this topic you should be able to

? Use the ANS key to carry out repeated calculations. ? Round of answers to 2 decimal places on the MODE screen

T3 Scotland

Compound Interest

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COMPOUND INTEREST Calculator Skills Sheet

The TI-83 "remembers" the answer to the last calculation carried out (the result of pressing the ENTER key). This answer is recalled by using the ANS button. [2nd] [(-)]. This feature is useful when calculating Compound Interest or other similiar problems. EXAMPLE: Calculate the net value of ?5600 invested for 4 years in a saving account

bearing 7.8% p.a.

1. Enter the principal amount (5600) and press ENTER. The TI-83 considers this as the answer to a calculation that has been carried out, even though no operator was used.

2. Now calculate an increase of 7.8% i.e. The new principal amount is 107.8% of the previous amount. 107.8% as a decimal is 1.078.

The ANS function is the 2nd:(-). The TI-83 has calculated 5600 ? 1.078.

3. Repeated pressing of ENTER, gives the principal amount in subsequent years. Each button press is 1 year. After 4 years the principal sum has grown to ?7562.46

4. An alternative display can be used when calculations involve money. It may be useful to set the TI-83 to round to 2 decimal places, hence getting answers that look like cash amounts. This setting is altered on the MODE screen. On the second line of this screen highlight the 2.

5. The above calculation would now be displayed like this, if it was carried out again.

6. TAKE CARE: Once the TI-83 is set to round-off answers it continues to do so until the MODE is reset to Float.

T3 Scotland

Compound Interest

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Exercise

1. Calculate the net value on: (a) ?520 for 5 years at 6.9% p.a. (c) ?6800 for 9 years at 6.9% p.a.

(b) ?56220 for 6 years at 12.7% p.a. (e) ?96000 for 15 years at 12.7% p.a.

2. The population of Scotland in 1999 was estimated at 5.2 million people, if the growth rate is estimated at 2% per annum, what is the estimated population for 2000 and 2001.

3. A car cost ?16500 when new. Calculate its value, to the nearest ? after 5 years. (a) Assuming an annual depreciation of 15% (b) Assuming depreciation of 20% in the first year, and 10% in subsequent years.

4. An other car cost ?18000 when new. Calculate its value, to the nearest ? after 5 years. (a) Assuming an annual depreciation of 20% (b) Assuming depreciation of 25% in the first year, and 5% in subsequent years.

5. A car cost ?16500 when new. Calculate its value, to the nearest ? after 5 years. (a) Assuming an annual depreciation of 23% (b) Assuming depreciation of 20% in the first year, and 15% in subsequent years.

T3 Scotland

Compound Interest

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