Simple Interest / 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

How do you calculate Simple Interest?

Back

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

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 calculate Compound Interest?

Back

Compound Interest can be calculated using the formula: 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, n is the number of times that interest is compounded per year, and t is the number of years.

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 interest that has already been added.

Front

If you deposit $5,000 at a 2.5% simple interest rate for 3 years, how much interest will you earn?

Back

$375.

Front

If you lend $240 and receive $30 in interest after one year, what is the interest rate?

Back

12.5%.

Front

How do you convert months into years for Simple Interest calculations?

Back

Divide the number of months by 12.

Front

What is the formula for calculating the total amount with Compound Interest?

Back

A = P (1 + r/n)^(nt).

Front

If Caiden earned $475 and deposited it at 3.8% compounded annually for 15 years, what will be his balance?

Back

$831.10.