A brief comparison of simple interest and compound interest.

1. Bu dget ing
Presente
d
By
Mr.
G lennon

2. tulations!
Congra
You
finall
y
have
a
job!
Time
to
buy
stuff!

3. New T V!
How
abo
ut
that
ch
oice
HDT
V
Only
$2000.00…not
much
when
you
have
a
job…
…. right???

4. ee mone y…?
Fr
You’re
a
l
iJle
short
o
n
cash
How
about
a
CREDIT
CARD?
NOW…Pay
LATER!
Buy

5. x actly f ree
Not e
Not
quite
free…bu
sUll
a
gre t
at
deal!
You’ll
have
to
pay
later,
but
you
get
the
HDTV
NOW!

6. w it works
Ho
Put
$200
0.00
on
t
he
card…
…pay
$2000.00
back
later.
R ight???

7. not so much
Yeah…
Put
$200
0.00
on
t
he
card…
ack
$2000.0 0
(If
you
Pay
b
the
ENTIRE
$2000.00
pay
b ack
when
t he
first
bill
comes)

8. interest
$2000.00 %
+
Principal
Interest
=
What
you
PAY

9. interest
IF
YOU
PAY
$2000.00
+
IT
OFF
10
%
Interest
IMMEDIATELY!
=
$2200.00

10. interest
NO
BIG
DEAL
$2000.00
Only
$200.00
+
extra
10
%
Interest
…and
I
sUll
get
=
the
TV
now!
$2200.00

11. NO PE!
Meet
your
ne
w
friend!
COMPOUND
INTEREST
This
is
Compound
Interest.
He
is
horrible
and
he
hates
you.

12. 2 kinds of
inte rest
SIMPLE
INTEREST
1
Pay
a
percent
of
what
you
bor
row.
Usually
on
a
schedule
(10%
for
2
years)

13. 2 kinds of
inte rest
COMPOUND
INTEREST
2
Pay
a
percent
of
what
you
bor
row
but
MORE
int
erest
compounds
o
n
top
of
the
princip
al
AND
interest
you
owe.

14. ex ample
Simple
interest
$2000.00 The
amount
y
ou
have
to
pay
b
+
ack
is
$2200,
no
10
%
Interest
maJer
how
l
ong
=
it
takes.
$2200.00

15. ex ample The
amount
y
ou
have
to
pay
b
Compound recalculated
e
ack
is
interest ach
billing
period
.
It
is
$2000.00 a
percent
of
t
he
+
amount
you
borrowed
AN
10
%
Interest
D
the
original
amou
=
nt
of
$2200.00
interest.
+
2.5%
+
2.5%
+
2.5%