Simple & Compound Interest Quick Check

Front

What is the formula for calculating simple interest?

Back

I = Prt, where I is the interest, P is the principal amount, r is the rate of interest per year, and t is the time in years.

Front

What does the 'P' in the simple interest formula I = Prt represent?

Back

The 'P' represents the principal, which is the amount of money borrowed or deposited.

Front

If an investment earns interest compounded semi-annually, how many times is the interest calculated in one year?

Back

The interest is calculated 2 times a year.

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any interest that has been added to it.

Front

How do you calculate the total amount after compound interest is applied?

Back

Total Amount = P(1 + r/n)^(nt), where P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.

Front

What is the total amount Karla will earn after investing $1,000 at 6.75% compounded semi-annually for 15 years?

Back

$2,706.86.

Front

If Courtney saved $2,200 at an interest rate of 5.2% compounded daily for 4 years, what will be the total amount in her account?

Back

$2,708.63.

Front

How much interest will Ann earn in one year by investing $300 at a 4% interest rate?

Back

$12.

Front

What is the time period in years for Karla's investment?

Back

15 years.

Front

What is the annual interest rate for Courtney's savings account?

Back

5.2%.