Financial Mathematics - advanced

This lesson comprises two (2) master classes focusing on:

• Simple and compound interest
• Depreciation

Content:

MA5-FIN-C-02

Solve problems involving compound interest and depreciation

• Examine compound interest for up to 3 time periods using repetition of the formula for simple interest
• Associate the calculation of the total value of a compound interest investment with repeated multiplication, using digital tools
• Establish and use the formula \( FV=PV(1+r)^n \) to find compound interest where \( FV \)=future value of the investment,  \( PV \)=present value of the investment, \( r \)=interest rate per time period and \( n \)=number of time periods
• Solve problems involving compound interest
• Compare simple interest with compound interest in practical situations
• Use the compound interest formula to establish the depreciation formula \( S=V_0(1-r)^n \) where \( S \)=salvage value, \( V_0 \)=initial value of the asset,  \( r \)=depreciation rate per time period and \( n \)=number of periods
• Solve problems involving the depreciation of an asset