Simple and Compound Interest

Front

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

Back

Interest

Front

What does 'A' represent in the compound interest formula A = P(1 + r)^t?

Back

The total amount of money after a certain amount of time.

Front

Convert 4.3% to a decimal.

Back

.043

Front

If a bank offers 7% annual compound interest, how much will $1,500 grow to after 3 years?

Back

$1837.56

Front

What is the formula for calculating compound interest?

Back

A = P(1 + r)^t

Front

What does 'P' represent in the compound interest formula A = P(1 + r)^t?

Back

The principal amount (initial investment).

Front

What does 'r' represent in the compound interest formula A = P(1 + r)^t?

Back

The annual interest rate (as a decimal).

Front

How do you calculate simple interest?

Back

Simple Interest = Principal × Rate × Time.

Front

If you deposit $500 at 5% annual interest compounded annually, how much interest will you earn after 4 years?

Back

$107.75

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal, while compound interest is calculated on the principal plus any interest earned.