3. Compound Interest
What you'll learn
- you will be able to determine the compound interest earned on an investment over a given period of time (even if the rate changes)
- you will be able to determine the cash value of a payment due in the future
- you will be able to discount more than one payment due in the future to come up with an equivalent cash value for all
- you will be able to solve for the nominal interest rate of an investment
- you will be able to determine the number of interest periods required for an investment to have a specified maturity value
- you will need a scientific calculator with an exponent key and at least one memory storage location. A financial calculator would be even better.
- you will need to have a good understanding of the time value of money.
- you may complete the pre-requisite course on Simple Interest as many of the concepts discussed in Simple Interest are repeated for Compound Interest (only the formulas are different).
- Simple Interest.
In this course, you will learn how to determine the maturity value of an investment using compound interest. You will also be able to determine the present value if you are provided with the future value. You will be provided with a base set of course notes which you can use while you are watching the videotaped lectures. The course will take about 3-4 days to complete but this may vary among different students. There are lots of quizzes built in throughout the course to test your understanding of the materials at different stages.
To fully appreciate the concepts of Compound Interest and how time and rates affect the value of currency, you may wish to go over the learning materials found in the Basics of Simple Interest .
Who this course is for:
- students who are taking a mathematics of finance course
- business students
- students who need an additional resource for compound interest calculations
Hi. I hold a 4 year Bachelor of Mathematics degree from the University of Waterloo and a B Ed (Honours) from the University of Western Ontario. While I have been trained as a high school mathematics educator, I have had the pleasure of teaching mathematics at the post secondary level for four community colleges in southern Ontario. When I am not teaching, I like to fool around with my camera, muck about in the garden, read a good book and sail around in a boat. Not necessarily in that order.
Feel free to browse through all of my Udemy courses on Mathematics of Finance. There are many links to be able to have limited view of some videos and/or notes for most of the courses. This will enable you to have a sneak preview of what you can expect and whether my materials will be of benefit to you. I have listed the courses by number sequencing the order that they should be taken in, however, if you have prior knowledge or experience with simple and compound interest, then you can jump right into the annuities and annuity applications courses. The content covered is closely matched to what is taught at the community college level but is also valuable to those who are interested in financial mathematics.
While much material can be found on YouTube, the topics are consolidated and better organized in this Udemy course format.