Compound and Simple Interest Practice

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What is the formula for compound interest?

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'A' represents the total amount of money accumulated after n years, including interest.

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

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'r' represents the annual interest rate (in decimal form) applied to the principal.

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't' represents the time the money is invested or borrowed for, in years.

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How do you convert a percentage to a decimal?

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To convert a percentage to a decimal, divide the percentage by 100. For example, 5% becomes 0.05.

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What is the difference between simple interest and compound interest?

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Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal and also on the accumulated interest from previous periods.

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If you invest $1,000 at a 5% annual interest rate compounded annually, what will be the amount after 3 years?

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What is the formula for calculating simple interest?

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If you have $500 invested at a simple interest rate of 4% for 5 years, how much interest will you earn?

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