Financial Maths: Use simple and compound interest to explain and define a variety of situations
Subject outcome 5.2
Use simple and compound interest to explain and define a variety of situations.
Learning outcomes
- Differentiate between simple and compound interest.
- Explain the advantages and disadvantages of using simple and compound interest in specific situations.
- Use and manipulate the simple growth formula [latex]\scriptsize A=P(1+in)[/latex] to solve problems.
- Use and manipulate the compound growth formula [latex]\scriptsize A=P{{(1+i)}^{n}}[/latex] to solve problems subject to only annual compounding being made.
Unit 1: Simple and compound interest
By the end of this unit you will be able to:
- Differentiate between simple and compound interest and extrapolate the advantages and disadvantages of each in specific situations.
- Calculate simple and compound interest over different periods at specific rates.
- Do calculations using computational tools efficiently and correctly and verify solutions in terms of the context.
- Use solutions to calculations effectively to define the changes that occur over a period.
