Simple & 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.

Tags

CCSS.7.RP.A.3

Front

What is Compound Interest?

Back

Compound Interest is calculated on the initial principal and also on the accumulated interest from previous periods. The formula is A = P(1 + r/n)^(nt), where A is the amount, P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.

Front

What does 'P' stand for in the interest formulas?

Back

P stands for Principal, which is the initial amount of money invested or borrowed.

Front

What does 'r' represent in the interest formulas?

Back

r represents the rate of interest, expressed as a decimal.

Front

What does 't' represent in the interest formulas?

Back

t represents the time the money is invested or borrowed for, typically in years.

Tags

CCSS.8.EE.C.7B

Front

How do you convert a percentage to a decimal?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 2% becomes 0.02.

Front

Calculate the Simple Interest for a principal of $2000 at a rate of 5% for 3 years.

Back

Simple Interest = P * r * t = 2000 * 0.05 * 3 = $300.

Tags

CCSS.7.RP.A.3

Front

Calculate the Compound Interest for a principal of $1000 at a rate of 4% compounded annually for 2 years.

Back

Compound Interest = A - P = 1000(1 + 0.04)^2 - 1000 = $40.80.

Tags

CCSS.HSF.BF.A.2

Front

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

Back

The formula is A = P(1 + r/n)^(nt), where A is the total amount, P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.

Front

If $500 is invested at an interest rate of 6% compounded annually for 4 years, what is the total amount?

Back

Total Amount = 500(1 + 0.06)^4 = $632.65.

Tags

CCSS.HSF-LE.A.1C