Simple and compound interest

Front

What does the 'I' in the interest formula stand for?

Back

Interest

Front

How do you convert a percentage to a decimal?

Back

Divide the percentage by 100.

Front

What is interest?

Back

Extra money paid for borrowing.

Front

Before using the rate in the simple interest formula, how must it be expressed?

Back

As a decimal.

Front

What does the 't' represent in the simple interest formula I=Prt?

Back

Time.

Front

What is the formula for calculating simple interest?

Back

I = P * r * t, where I is interest, P is principal, r is rate, and t is time.

Front

What is the principal in the context of simple interest?

Back

The initial amount of money borrowed or invested.

Front

How do you calculate the total amount to be paid back including interest?

Back

Total Amount = Principal + Interest.

Front

What is compound interest?

Back

Interest calculated on the initial principal and also on the accumulated interest from previous periods.

Front

How does compound interest differ from simple interest?

Back

Compound interest is calculated on the total amount (principal + accumulated interest), while simple interest is calculated only on the principal.