As-salāmu ʿalaykum people, this is my first mini project presentation on Interest.The aim of this project presentation is to provide information about interest. if you find any kiind of mistake in my slide so please inform me.

1. MINI PROJECT
MADE BY:WAJEEHA AHMED
REGISTRATION NO:10840
SUBJECT: BASIC MATHS
ASSIGNED BY: SIR ARIF

2. The purpose of this project is to define
interest and calculations related to
interest.

3. INTEREST :
CONTENTS :
 INTRODUCTION TO INTEREST.
 SIMPLE INTEREST.
 COMPOUND INTEREST.
 CALCULATIONS RELATED TO SIMPLE
AND COMPOUND INTEREST.

4. WHAT IS INTEREST ?
 It is payment from a borrower or deposit-
taking financial institution to a lender or
depositor of an amount above repayment
of the principal sum.

5. TYPES OF INTEREST :
There are two types of interest.
 SIMPLE INTEREST.
 COMPOUND INTEREST.

6. SIMPLE INTEREST :
 Simple interest is a handy, easy tool for
estimating the interest earned or paid on
a certain balance in period.

7. FORMULA :
 It can be calculated by this formula .
Interest = Principal, dollar × Rate ×
Time or I = P × R × T

8. SOLUTION:
SIMPLE INTEREST = PRINCIPLE X RATE X TIME
S.I = 200 X 0.06 X 2
S.I = 24
THAT IS, THE SIMPLE INTEREST EARNED IS $24
CALCULATION RELATED TO S.I :
 Ali invested capital $200(the principal).
The simple interest is charged at a rate of
6% per year over 2-years. Calculate the
simple interest?

9. COMPOUND INTEREST :
 Interest calculated on both the principal
and its accrued interest.

10. FORMULA :
 The formula of compound interest is

11. CALCULATIONS RELATED C.I :
EXERCISE NO 8.1
Q NO 05
 A $840 certificate of deposit earns interest of
8% per year, compounded semiannually.
Complete the following table with regard to
semi-annual compounding. What is the total
interest over the 2-year period?

13. Q7: Refer to Ex: 05
(a) Determine the compound amount after 4
years if interest is compounded quarterly
Instead of semiannually.
(b) Under which compounding plan, semi-
annually or quarterly, is total interest
higher? By how much.

17. Q9: The compound amount factor (1+i) ^n
EXERCISE NO # 8.2
to which $1 would grow after n periods if it
earns compound interest of (I) percent per
period. Determine the compound amount and
the interest earned if $1 is invested for 8 years
at 12%per year.
a.Compounded semiannually,
b.Compounded quarterly, and
c.Compounded bi-monthly.

21. The effective annual interest rate is
the interest rate that is actually earned or paid
on an investment, loan or other financial
product due to the result of compounding over
a given time period.
EFFECTIVE ANNUAL
INTEREST RATE:

22. FORMULA:

23. Q27: The nominal interest rate on an
investment is 6% per year. Determine the
effective annual interest rate if (a) interest is
compounded semiannually and (b) interest is
compounded quarterly.

24. TO CONVERT IN PERCENTAGE:

25. CALCULATION BY USING MS-EXCEL

26. PRINCIPAL (P) 840 FOR I :
INTEREST RATE (r) 8%
m*n=4*2=8 ( 8 Row
are required)
SEMI ANNUALLY (m) 2
m/r=8%/2=4%=4/100
=0.04
NO.OF TIME PERIOD
(n) 4 33.6
PERIOD PRINCIPAL INTEREST S = P+I
S=Compound
Amount
1 $840 $33.60 $873.60
2 $873.60 $34.94 $908.54
3 $908.54 $36.34 $944.89
4 $944.89 $37.80 $982.68
5 $982.68 $39.31 $1,021.99
6 $1,021.99 $40.88 $1,062.87
7 $1,062.87 $42.51 $1,105.38
8 $1,105.38 $44.22 $1,149.60

27. PRINCIPAL (P) 840 FOR INTEREST (I):
INTEREST RATE (r) 8% m*n=4*4=16 (16 periodsare required)
QUATERLY (m) 4 m/r=8%/4=2%=2/100=0.02
NO.OF TIME PERIOD 4 16.8
PERIOD PRINCIPAL INTEREST S=P+I
1 $840 $16.80 $857
2 $857 $17.14 $873.94
3 $873.94 $17.48 $891.41
4 $891.41 $17.83 $909.24
5 $909.24 $18.18 $927.43
6 $927.43 $18.55 $945.98
7 $945.98 $18.92 $964.90
8 $964.90 $19.30 $984.19
9 $984.19 $19.68 $1,003.88
10 $1,003.88 $20.08 $1,023.96
11 $1,023.96 $20.48 $1,044.43
12 $1,044.43 $20.89 $1,065.32
13 $1,065.32 $21.31 $1,086.63
14 $1,086.63 $21.73 $1,108.36
15 $1,108.36 $22.17 $1,130.53
16 $1,130.53 $22.61 $1,153.14

28. 2*4
FOR QUARTERLY:
F.v=C.I= 840(1+0.08/4)4*4
=$1,153.14
FOR SEMI-ANNUALLY:
F.v=C.I= 840(1+0.08/2)
=$1,149.60

29. EFF. Rate= (1+r/m)
m
-1
Eff. Rate=r= (1+0.06/2)^2 -1
=0.0609*100
=6.09%
Q27 DATA:
R=i=interest rate=6%=6/100=0.06
Effective annual interest rate=r=?
Semi-annually=m=2
Quarterly=m=4
SOLUTION

30. Q9
P=principal=$1
Effective annual interest rate=r=?
Semi-annually=m=?
Quarterly=m=?
Bi-monthly=m=?
n=t=4 years
DATA:
R=i=Interest rate=12%=12/100=0.12
n=t=4 years

31. SOLUTION:
F.v=C.I=P (1+r/m)
m*n
FOR SEMI-ANNUALLY:
2*8
F.v=C.I= F.v=C.I=
FOR QUARTERLY:
4*8
(1+0.12/2)=
$2.540 $2.575
(Semi-annually=m=2) (Quarterly=m=4)
1 =1(1+0.12/4)

32. FOR BI-MONTHLY:
Bi-monthly=m=6
(Monthly=12
BI-monthly=12-6
=m=6)
SOLUTION:
F.v=C.I= 1 (1+0.12/6)
6*8
= $2.58

33. THANK YOU