6.3 day 2

Front

What is the formula to calculate the future value of an investment with compound interest?

Back

Future Value = P(1 + r/n)^(nt), where P = principal amount, r = annual interest rate, n = number of times interest applied per time period, t = number of time periods.

Front

What does 'compounded quarterly' mean?

Back

It means that the interest is calculated and added to the principal four times a year.

Front

If a bacteria culture starts with 5000 cells and dies by 30% each year, what is the decay factor?

Back

The decay factor is 0.7, meaning 70% of the cells remain after each year.

Front

How do you calculate the appreciation of an asset over time?

Back

Use the formula: Future Value = Present Value * (1 + rate)^number of years.

Front

What is the meaning of 'appreciation' in financial terms?

Back

Appreciation refers to the increase in the value of an asset over time.

Front

What is the significance of the variable 'n' in the compound interest formula?

Back

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

Front

How do you round a number to the nearest whole dollar?

Back

Look at the digit in the tenths place; if it's 5 or more, round up; if it's less than 5, round down.

Front

What is the formula for exponential decay?

Back

Exponential decay can be represented as y = a(1 - r)^t, where a is the initial amount, r is the decay rate, and t is time.

Front

If an investment of $3,000 earns 2.9% interest compounded quarterly, how do you find the total amount after 10 years?

Back

Use the formula: A = P(1 + r/n)^(nt), substituting P = 3000, r = 0.029, n = 4, and t = 10.

Front

What does 'quarterly' mean in terms of frequency?

Back

Quarterly means occurring four times a year.