Simple and Compound Interest

Front

What is Simple Interest?

Back

Simple Interest is calculated using the formula I = Prt, 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

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 Simple Interest?

Back

I = Prt

Front

What does 'P' represent in the Simple Interest formula?

Back

'P' represents the principal amount, which is the initial sum of money invested or borrowed.

Front

What does 'r' represent in the Simple Interest formula?

Back

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

Front

How do you convert a percentage to a decimal?

Back

To convert a percentage to a decimal, divide the percentage by 100.

Front

What is the formula for calculating Compound Interest?

Back

A = P(1 + r)^t, where A is the total amount after interest, P is the principal, r is the rate, and t is the time.

Front

What does 'A' represent in the Compound Interest formula?

Back

'A' represents the total amount of money after a certain amount of time, including interest.

Front

If the principal is $6000, the interest rate is 5%, and the time is 6 months, what is the Simple Interest?

Back

$150

Front

If Paul deposits $4000 at a 4% compound interest rate, how much will he have in 5 years?

Back

$4866.61