: CRabter - 2 / TRe bowie theovy. of. tolevest Interests. the time volue of money.» of you invest $1 ing bamk account fap boys By intoxst Per year, then at the end of one Go" you wil Rowe in dour account ; = Princibal amount (onigires money) + Interest = 4) +3 (FE) = $14 $ 00g = $ 10g ———— & That means your account is grown by Ixo-08 lotr. Suppor qou an investing Adellay amd bank boys interest crate 7; per year. Then af the end of one peer you wel Rowe im your account : A+ AKY We are exbrevsing +r In [ deatmal. u ACt+y) » That means your account ss grown ba Axx doar, ov # After one gear, gour aceounl wil) increare ba a mulivble of +v)- WWW LULU UUW vo ddd Scanned with CamScannerSimple Intevert:- Under o stmble mlerst rule , money vested for o period different, from 1 year accumulates interest brofortnel to the total time of investment. « 9f you are routing £ doHoy ord interest vole 1 1. Then qour account ul more bg XL, after one years monary, by QV x after two ene. 4 our account uu) inereare om nr xh ofler “W year. ao your account wil ¥ your occount wil increar by Ere after 6 months. + your account ul rnereai by Ent after 4, month. x your account wil rmereax boy tal ofte cues mofhth, Now pupbox you imvested an amount A im a banb account, and infewit “vole ‘of bon ig ; uu gel: Ae+rA V = bara: Cost “flows 4 yeor a. AAA ) Ss a AarA ¥. Then offer one yer You After two year dou wid qe Vi = A+7vA +7A = Ai+orA e (itov\4 Cosh flow stream CA, va, Arr) ae hae A+2rA Scanned with CamScanner PRD PPAPRPDAD ID DPP YD DDD GODDDDDDDRASAL2VVVVVVVY YD VYVOVEDVVDDVOOUUGUOUOCUCOCEEE After n years you uw-U qe: cash flow stron Vs AtyharAne-- +74 = Any \ te, why vy) Rh] = Rm (banr)A, u 2 3 nel n ee A mh 7A mH - A AsrA Ramen = Gane) After & moths you wu gehs- Vos A+aznn 2) o brea. 4 Ce A ate fA After + morlfs | you will get; Vis x A+ A ise) A “fies so A (4x0 Aflor a fraction fof one JO") mteres! vate te ull be vf. After first pemiad , we ae: Vi= A+rth = Ort) A. ay Scanned with CamScanner9 proportioned! wwe Ralds for rockin years, ther after ony time £, the accourt value ry Vv A+v44A 3 (ite 5 A- (Ree é measured vn year) W Now consider “the equation V = (l+nv)a = nrat+nA Ves Ga) A. 5f we oxume n asa vorable , then grabh will be Pras 4 5 6. SG ————» time poriod From the grobh , we cong sy occoun} grows dineanky , t trterest of YU mterest yy compo vrdeal eeorey, then after one year, the fis year's interert is added do the original povcibal to to defire 9 brger princi bod boxe for the cord qeev thus during fRe second yeay, the accounl earns interes! on interest. Gombound Interest ; - Gonsidev an occount that paxye oJ O yle of 7 per gear, Scanned with CamScanner RARAAARDAALADA®DOOOND GD ODODODDOD © © © CQ@Supbor. you muested 1 doar sm a bank account usith imleret rah v 9F we ceippourding years. «then after 4: year you ust! ae Vo = do +erk =. jer: After two yeons: Vo= (lay) + 7 Livy = (avy Afler % year VS har hy Garber = ltr) (or = lav). Bat Vi= (ayy Now supbox you invarkd A dolar 1 a bank aceount sith mleret vole vr, If we compouniiens years then, after 1 yew uu ui) get: e i Y= A+yrxr = lav) A fier 2 yeart: Vie liev)A + vxb47) A = wa Ctr) = lav fA. _Adter 9 ee ys aya. VV VV EUVVVVY DVYUEDUGDEOUVOVUOOWCOWVECECEE # Ths sPows geometric grat in your account. . Scanned with CamScannerExoonble:- . Subbor you meted $100 1% a bank ord meet & vale of bank re loy, = orl. Then if we combed yeardy then after one year we gat a ve (vA Be lee re ol = (140-1) joo = 11x 100, AEE YO ok tae a (i+ o-ty" foo = (vty x yoo. After 3 ‘ After 3 year: viel feta = Any%x joo, After 1 yeom: Ve O47" «jo We can drow the grok 0+ follows: Jove (of oe as vo) aaa boo . $ Pn SE Eko pe HI peepee elise iiipewens P9999 Scanned with CamScannerUnder compounding roterat Volue uu) be clouble after 4 y- Axhoo, w= I0%= lee od, yoo 4x Ve (is ¥ Vode . 2 rial V4 Ya toe yo = (14 0028) x00 1 = eas J xyen, More. frequent compounding GIVES more profi}: LE amour =1, ond yearly vole of ners} te ., Sel Of we are compounding. year r then after 1 year we at ¥, u (+x) 9 = Itv (az ye Now, Jf we are tem pourdena: Gey then volwe after one, year ust be BS 1 ca + 2 > D> " o> x tix wy ue 4+ (-1). WILLE LWLUD DOW UVUUU DU We vv eee Scanned with CamScannerCleary, Ve ? Vis ( we an bhing 1? ef) ——— Siroy it we divide L yeat nto f ferieds , then value fn ombourdiny aftercaer after 1 yeow ye (iseye 4 roteval ) nf . = (iv ) (fat) UPen we ove cove tiupdirgs ean. we get value n V's. (14x) 4 = lay)” @=.) 9 rv P 0, then y Sv Due _to this new foren aries Rene rawr effective inlevet rode Scanned with CamScanner RPPPPPPPIIPPIPIPIL ILI TL IP TP PINTS A YAAS