MATH 110 Lecture Notes - Lecture 28: Interest
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In working with word problems, there are some words or phrases that give clues as to how the problem should be solved. The most common words or phrases are as follows: add. As you work a variety of word problem types, you will discover more (cid:1688)clue(cid:1689) words. A final reminder: be sensitive to what each of these questions is asking. Note that both rate and time are in yearly terms (annual rate; years). Here are some examples for calculating compound interest in word problems. First, circle what you must find final total amount of money. Note also that interest will be compounded each year. Therefore, the solution has three parts, one for each year. Thus, the total after one year is ,000 + = ,120. Note that the principal at the beginning of the second year was ,120. Thus, the total after two years is ,120 + . 40 = ,254. 40.
