Compound Interest

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 Compound Interest?

Back

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

Front

In the formula A = P(1 + r)^t, what does 'A' represent?

Back

A represents the total amount of money accumulated after n years, including interest.

Front

In the formula A = P(1 + r)^t, what does 'r' stand for?

Back

r stands for the annual interest rate (in decimal form). For example, 5% would be 0.05.

Front

In the formula A = P(1 + r)^t, what does 't' represent?

Back

t represents the number of years the money is invested or borrowed.

Front

If Jacob borrows $500 at an interest rate of 2.5% compounded annually for 5 years, how much will he owe?

Back

Jacob will owe $565.70.

Front

If Julia invests $1000 at 5% compounded annually for 4 years, how much will she have?

Back

Julia will have $1215.51.

Front

If Daniel invests $360 at 5.5% compounded annually for 8 years, what will be the total amount?

Back

Daniel will have $552.49.

Front

If Henry deposits $750 at an interest rate of 8.5% compounded annually for 5 years, how much will he have?

Back

Henry will have $1127.74.

Front

What does 'P' stand for in the compound interest formula A = P(1 + r)^t?

Back

P stands for the principal amount (the original amount of money).