Chapter 26: Explaining
Jeff nodded as he stepped forward again, facing the class with the calm composure of someone who knew he held the spotlight.
But deep beneath that calm exterior, hid a look of embarrassment and shyness.
"Alright, ummm, so the question asked us to compare simple interest and compound interest over five years using 10,000 pesos with a 2% annual rate."
He turned to the board and began writing as he explained.
"For Simple Interest, I used the formula I = P × r × t."
"The principal stays the same every year, so all I had to do was multiply 10,000 by 0.02 and then multiply that by the number of years. That gave me the interest per year, and I added it to the original amount." As he pointed at the simple interest table.
"Since it doesn’t grow, you get flat increases: 200, 400, 600, 800, up to 1,000. So after 5 years, you earn a total of 1,000 pesos."
He let the class absorb that for a second before continuing.
"Now for Compound Interest, it’s different. I used the formula A = P(1 + r)^t, but instead of doing it all at once, I broke it down year by year to show how it grows."
He turned to the compound interest section and said:
"In the first year, I multiplied 10,000 by 0.02 that’s 2% added. That gave me 10,200."