Simple and Compound Interest

Front

What is the formula for compound interest?

Back

A = P(1 + r)^t

Front

What does 'A' represent in the compound interest formula?

Back

The total amount of money after a certain amount of time.

Front

What is the formula for simple interest?

Back

I = Prt

Front

What does 'P' represent in the simple interest formula?

Back

The amount of money borrowed or deposited.

Front

What does 'I' stand for in the interest formula?

Back

Interest

Front

If you deposit $1,500 at 7% annual compound interest, what will be the total amount after 3 years?

Back

$1837.56

Front

If Audrey deposits $2,800 at 2.65% interest compounded annually, what is the total value after 7 years?

Back

$3362.57

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 and also on the accumulated interest.

Front

How do you calculate the interest earned on a principal amount using simple interest?

Back

I = Prt, where P is the principal, r is the rate, and t is the time.

Front

What is the effect of time on compound interest?

Back

The longer the time period, the more interest is earned due to compounding.