Compare Interest

Front

What is the formula to convert months to years?

Back

To convert months to years, divide the number of months by 12.

Front

How many years are in 18 months?

Back

1.5 years.

Front

How many years are in 60 months?

Back

5 years.

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

What is the formula for calculating the future value of an investment with compound interest?

Back

A = P(1 + r)^n, 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), and n is the number of years.

Front

If Heather invested $8,000 at 4.1% interest compounded annually for 4 years, what is the value of the investment?

Back

$9,394.92.

Front

What does 'compounded annually' mean?

Back

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

Front

What is the value of Steve's account after 3 years if he deposited $5,000 at 4% interest compounded annually?

Back

Use the formula A = 5,000(1 + 0.04)^3.

Front

How do you express a percentage as a decimal?

Back

To express a percentage as a decimal, divide by 100.

Front

What is 4% expressed as a decimal?

Back

0.04.