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Finance - Compound Interest

Angela

Created on March 16, 2025

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Transcript

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Are you ready to host the ultimate island party! You are going to need a band, decorations and a glorious feast for all your new business clients and friends! First...you have to learn how to make money off the moeny you already have...Compound Interest!

Welcome Back!

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Mission Recap/Goals
You are a brilliant survivor and business owner! It is time to celebrate your success and all the resources you have acquired on your journey! We have to protect your cash and make more cash before the invitations are sent out!

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We must have a live island band for our party! Bands are expensive and we need to learn how to make more money simply by using the money we already have!
Mission #1

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Play me
The more frequently interest is compounded, the faster the investment grows.
True False
Based on the video, what is the key difference between simple interest and compound interest??
Simple interest requires monthly contributions, while compound interest does not.
Compound interest only applies to bank accounts.
Simple interest earns interest only on the initial principal, while compound interest earns interest on both the principal and previously earned interest.
If you invest $1,000 at an annual interest rate of 5%, compounded annually, how much will you have after 2 years?
$1,100
$1,050
$1,102.50
You are loading up on the cash and have booked the most iconic band in the Caribbean!
Mission #1 Completed

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What is a party without extreme decorations? No Fun :( We need to invigorate our new customers and delight them with an extravagent decor and experience! But it costs money...
Mission #2

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Gain Wisdom Before you Move on!

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You invest $500 at an interest rate of 6%, compounded annually. Which statement best describes what will happen to your money over time?
Your money will grow only when you make additional deposits.
Your money will grow at an increasing rate because interest is earned on previous interest.
Your money will grow at the same rate each year.

Choose the image that best represents how compound interest works over time:

Which of the following will help you earn the most money with compound interest?
Depositing more money and letting it grow longer
Choosing an account with simple interest instead
Withdrawing interest as soon as it’s earned.
Amazing how fast the cash goes! You are almost ready for the big bash and still making money off the money you are saving...brilliant islander!
Mission #2 Completed

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You give your absolute all in business and your clients are going to expect a luxury gourmet feast! As a smart business owner, we know we can not go broke and we need to continue to make money off our own money!
Mission #3

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Why is it better to start saving and investing early with compound interest?
Because compound interest rewards time, allowing money to grow exponentially
Because compound interest only works for investments started before age 30.
Because simple interest stops growing after a few years
Waiting 10 years before investing makes very little difference in how much you earn from compound interest.
True False

Emma starts investing $100 per month at age 20, while Jake starts investing $200 per month at age 40. Assuming they both earn the same interest rate, who will have more money at retirement?

Emma, because she started earlier and compound interest had more time to grow.
Jake, because he invested more per month.
Neither, because inflation cancels out their savings.
You did all this and you still have more money in your investment than you started with. Now that is BRILLIANT! I hope you are hungry!
Mission #3 Completed

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Wow! Impressive Islander!

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Enjoy! Remember "Critical Thinking" and "Compound Interest"
Oh' No! Stay Strong!
Oh' No! Stay Strong!
Oh' No! Stay Strong!
Oh' No! Stay Strong!
Oh' No! Stay Strong!
Oh' No! Stay Strong!
Oh' No! Stay Strong!
Oh' No! Stay Strong!
Oh' No! Stay Strong!