Simple/Compound Interest

Front

What is Simple Interest?

Back

Simple Interest is calculated using the formula: I = P * r * t, where I is the interest, P is the principal amount, r is the rate of interest per year, and t is the time in years.

Front

What is Compound Interest?

Back

Compound Interest is calculated on the initial principal, which also includes all of the accumulated interest from previous periods. The formula is A = P (1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest.

Front

How do you calculate Simple Interest?

Back

To calculate Simple Interest, use the formula: I = P * r * t.

Front

How do you calculate Compound Interest?

Back

To calculate Compound Interest, use the formula: A = P (1 + r/n)^(nt), where n is the number of times interest is compounded per year.

Front

What is the principal amount in interest calculations?

Back

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

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What does 'rate of interest' mean?

Back

The rate of interest is the percentage of the principal charged as interest for a specific period.

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What is the time period in interest calculations?

Back

The time period is the duration for which the money is borrowed or invested, usually measured in years.

Front

If Victor borrows $30,000 at a 7% simple interest rate for 8 years, how much interest will he pay?

Back

$16,800.

Front

If Nathalie borrows $25,000 at a 6.5% compound interest rate for 15 years, what will be her total amount?

Back

$64,269.

Front

Which bank gives more interest: Bank A (4% for 10 years) or Bank B (6% for 6 years) on $25,000?

Back

Bank A gives $10,000.