Simple & Compound Interest 8.12D

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 does 'P' represent in the simple interest formula?

Back

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

Front

What does 'r' represent in the simple interest formula?

Back

r represents the annual interest rate (as a decimal) applied to the principal.

Front

What does 't' represent in the simple interest formula?

Back

t represents the time the money is invested or borrowed for, measured in years.

Front

How do you convert months into years for interest calculations?

Back

Divide the number of months by 12.

Front

What is compound interest?

Back

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

Front

How is compound interest different from simple interest?

Back

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

Front

What is the formula for calculating compound interest?

Back

A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest.

Front

What does 'n' represent in the compound interest formula?

Back

n represents the number of times that interest is compounded per year.

Front

If you invest $2,800 at an interest rate of 2.65% compounded annually, what will be the total value after 7 years?

Back

$3,362.57.