4.1-4.2 Flashcard Retake

Front

What is the formula for calculating compound interest?

Back

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 (decimal), n is the number of times that interest is compounded per year, and t is the number of years.

Front

What does it mean for an investment to be compounded monthly?

Back

It means that the interest is calculated and added to the principal balance every month.

Front

If you invest $5000 at an interest rate of 3.75% compounded monthly for 25 years, what is the future value?

Back

$12,749.30

Front

How do you calculate the value of an asset that depreciates by a percentage each year?

Back

Use the formula: Value = Initial Value * (1 - depreciation rate)^number of years.

Front

What is the value of a $2100 computer after 2 years if it depreciates by 50% annually?

Back

$525

Front

What is exponential decay?

Back

Exponential decay describes a process where a quantity decreases at a rate proportional to its current value.

Front

Identify whether the function A=1200(0.85)^6 represents growth or decay.

Back

Decay.

Front

What is the initial value in the function f(x) = 300(1.16)^x?

Back

300.

Front

What is the difference between linear growth and exponential growth?

Back

Linear growth increases by a constant amount, while exponential growth increases by a constant percentage.

Front

What is the formula for exponential growth?

Back

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