AdvAlg Review 3.3-4-5-6 Simple-Compound-Continuous

Front

What is the formula for calculating simple interest?

Back

Simple Interest (I) = Principal (P) × Rate (R) × Time (T)

Front

What does the term 'Principal' refer to in finance?

Back

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

Front

If Anna invested $2,500 at an annual rate of 5%, how much interest will she earn in 9 years?

Back

$1,125

Front

What does 'Compound Interest' mean?

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 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

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

Back

The number of times interest is compounded per year.

Front

How often is interest compounded if it is compounded quarterly?

Back

4 times a year.

Front

What does 'Annually' mean in terms of compounding frequency?

Back

Annually means interest is compounded 1 time a year.

Front

If Kennedy puts $3,000 in a bank account that earns 2.9% interest compounded quarterly, how much will she have after 10 years?

Back

$4,005.09

Front

What is the formula for calculating compound interest?

Back

A = P(1 + r/n)^(nt), where A is the amount, P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.