Compound Interest

Front

What is the formula for compound interest when compounded continuously?

Back

A = Pe^(rt)

Front

What does 'e' represent in the context of compound interest?

Back

A mathematical constant approximately equal to 2.71828.

Front

If P = $26,000, r = 2.4%, and t = 4 years, what is the amount after compounding continuously?

Back

$28,619.74

Front

Calculate the amount for an investment of $400 at a rate of 35% compounded continuously for 2 years.

Back

$805.50

Front

What will be the balance after 15 years if $475 is deposited at an interest rate of 3.8% compounded annually?

Back

$831.10

Front

What is the difference between compound interest and simple interest?

Back

Compound interest is calculated on the initial principal and also on the accumulated interest from previous periods, while simple interest is calculated only on the principal amount.

Front

Define 'principal' in the context of compound interest.

Back

The principal is the initial amount of money invested or borrowed before interest.

Front

What does 'rate' refer to in the compound interest formula?

Back

The rate is the percentage at which interest is calculated on the principal.

Front

Explain what 'time' means in the context of compound interest.

Back

Time refers to the duration for which the money is invested or borrowed, usually expressed in years.

Front

What is the formula for compound interest when compounded annually?

Back

A = P(1 + r/n)^(nt) where n is the number of times interest is compounded per year.