In this module we’ll look at how mathematics can be used in different consumer math applications. All of these applications involve percents and interest. Interest is money paid to a lender or borrower as a cost of using money. A borrower pays interest to a lender for the use of money. A bank pays interest to a depositor as compensation for the bank using their money. We will start by examining how percents work and then use that knowledge to compare simple interest to compound interest.
Interest is an important part of financial transactions. You pay interest when you borrow money by using your credit card or taking out a loan for a car or home. You earn interest when you save money for retirement in an annuity. In the last three sections of this module, we’ll look at how these transactions work.
Our goal in this module is
Apply the mathematics of personal finance, including compound interest, annuities, and amortized loans.
The section below will help you to master this goal.