💯Unit #3 Flashcard

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

How do you convert an interest rate from a percentage to a decimal?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 3.8% becomes 0.038.

Front

What is the formula for compound interest?

Back

The formula for compound interest is 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

If an investment of $1,500 is compounded monthly at 4%, what is the balance after 5 years?

Back

The balance after 5 years is approximately $1,850.93.

Front

What is the y-intercept in the function f(x)=13(0.27)^x?

Back

The y-intercept (initial value) is 13.

Front

What does it mean for an interest rate to be compounded daily?

Back

Compounding daily means that the interest is calculated and added to the principal balance every day.

Front

How much interest will Jay'den earn from $475 at 3.8% compounded annually over 15 years?

Back

Jay'den will earn $356.10 in interest.

Front

What is the initial value in the function f(x)=0.05(2)^x?

Back

The initial value is 0.05.

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any accumulated interest.

Front

How do you find the total amount after 15 years if you invest $475 at 3.8% compounded annually?

Back

Total amount = Principal + Interest = $475 + $356.10 = $831.10.