Simple & Compound Interest

Front

What does the 'P' in the simple interest formula I=Prt represent?

Back

The amount of money borrowed or deposited.

Front

How much interest will Mr. Thomas earn if he opens a savings account with $1,500 at 3.4% interest for 3 years?

Back

$153

Front

To earn as much interest as possible, you should open a savings account that earns ______ interest and has the _____ interest rate.

Back

compound; highest

Front

If you are calculating simple interest and given the time in months, how can you find the time in years?

Back

Divide the months by 12.

Front

What is the formula for simple interest?

Back

I=Prt

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 and also on the interest that has been added to it.

Front

If you invest $1,000 at a simple interest rate of 5% per year, how much interest will you earn in 4 years?

Back

$200

Front

What is the total amount (A) after earning simple interest?

Back

A = P + I, where I = Prt.

Front

What is the effect of increasing the interest rate on the amount of simple interest earned?

Back

Increasing the interest rate increases the amount of simple interest earned.

Front

If you want to compare savings accounts, what type of interest should you look for?

Back

Compound interest.