Financial Math Flashcard

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

How do you calculate the total amount after simple interest is applied?

Back

Total Amount = Principal + Interest. Use the formula: A = P + (PRT).

Front

What is the formula for calculating simple interest?

Back

I = PRT, where I is the interest, P is the principal, R is the rate (as a decimal), and T is the time in years.

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, 150% = 150/100 = 1.5.

Front

What does it mean for interest to be compounded monthly?

Back

Compounding monthly means that the interest is calculated and added to the principal every month.

Front

If the interest is compounded daily, how many times is it compounded in a year?

Back

If interest is compounded daily, it is compounded 365 times in a year.

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 plus any interest that has already been added.

Front

How do you find the interest rate if you know the principal, total amount, and time?

Back

Rearrange the simple interest formula: R = (A - P) / (PT), where A is the total amount.

Front

What is the total amount if $2,200 is invested at 5.2% interest compounded daily for 4 years?

Back

The total amount is $2708.63.

Front

What is the principal in a simple interest problem?

Back

The principal is the initial amount of money borrowed or invested before interest.