Compound Interest

Front

What is Compound Interest?

Back

Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.

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. P is the principal amount, r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the number of years.

Front

What does 'Principal' mean in the context of compound interest?

Back

Principal is the initial amount of money deposited or borrowed before interest.

Front

What does 'Rate of Interest' represent?

Back

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

Front

What does 'Time' represent in compound interest calculations?

Back

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

Front

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

Back

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

Front

If interest is compounded quarterly, how many times is it compounded in a year?

Back

4 times.

Front

If interest is compounded monthly, how many times is it compounded in a year?

Back

12 times.

Front

What is the total amount paid after 8 years if $7,400 is borrowed at 9.5% interest compounded quarterly?

Back

$15,683.28.

Front

What is the significance of the number 15 in the context of Jay'den's investment?

Back

It represents the time (t) in years for which the money is invested.