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- Amount / Base = percent (decimal equivalent of %)
- Note: Where the base is the "whole amount" and the amount is the "part of the whole".
- (New amount - Base amount) / base amount = % (decimal eqivalent of %)
- Example: During Fall 2009, the tuition at College of the Desert was $20.00 per unit. This year the tuition increased to $36.00 per unit. What was the percent increase in tuition?
- [(36-20) / 20] x 100 = 80%
- 1. To infer or estimate by extending or projecting known information.
- 2. Mathmatics To Estimate (a value of a variable outside a known range) from values within a known rang by assuming that the estimated value follows logically from the known values.
Formula for computing simple interest
- I = Prt
- I is the Interest.
- P is the Pricipal.
- r is the rate (in decimal form).
- t is the time in years.
Formula for Computing Future value (Annuity) using Simple interest
- P + I = A
- P( 1 + rt) = A
Interest that is paid on a principal plus previously earned interest.
If the interest is added yearly.
If the interest is added every three months.
Summery of Formulas
- Amount / base = persent
- (new amount - base amount) / base amount = percent
- Percent x base = amount
- I = Prt
- A = P(1 + rt)
- A = P(1 + (r/t))n
Add-on Interest Method
- Monthly payment = (P + I) / n
- P is the amount of the loan.
- I is the amount of the interest due on the loan (I = Prt).
- n = is the number of total monthly payments.
Unpaid Balence Method
- P = previous months balance + finance charge (on last months balance) + purchases made - returns - payments.
- r = is the annual interest rate.
- t = 1/12
- I = Prt
Average Daily Balance Method
- 1. Add the outstanding balance for your account for each day of the month.
- 2. Divide the result in Step 1 by the number of days in the month to find "average daily balance".
- 3. Find the finance charge using the formula I = Prt where P is the average daily balance, r is the annual interest rate, and t is the number of days in a month divided by 365.
Let's say it is February and not a leap year. On February 1st your balance on your credit card is $2359.54. You charge gas on the 3rd for a total of $25.60. You charge lunch on the 8th for a total of $29.00. You pay a bill with your credit card on the 15th for $231.33. On the 20th you pay $300.00 credit to your credit card account. You charge gas again on the 26th for $24.75. Your credit card company charges 21% interest and uses the average daily balance method to compute your finance charge. What is your finance charge for February?
A financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. Anniuties are primarily used as a means of securing a steady cash flow for an individual during their retirement years.
If one payment is made at the end of every compounding period, the annuity is called an ordinary annuity.
The future value of any annuity is the amount in the account, including interest, after making all payments.
Formula for finding the future value of an ordinary annuity
- Assume that we are making n payments for t years of R into an ordinary annuity. The interest is being compounded n times a year and deposits are made at the end of the compounding period. The future value (or amount), A, of the annuity at the n periods is given by the equation: