Calculating Compound Interest

Front

What does the 'r' stand for in the compound interest formula?

Back

Rate

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.

Front

If you invest $1000 at an annual interest rate of 5% compounded quarterly, how much will you have after 3 years?

Back

$1160.00

Front

What is the effect of compounding frequency on the total amount of interest earned?

Back

The more frequently interest is compounded, the more interest will be earned over time.

Front

Emily spent $7,400 on furniture with 9.5% interest compounded quarterly. How much will she pay after 8 years?

Back

$15,683.28

Tags

CCSS.HSF-LE.A.1C

Front

What is the principal amount in a compound interest scenario?

Back

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

Front

How do you calculate the total interest paid on a loan?

Back

Total Interest = Total Amount Paid - Principal Amount.

Front

Karla invested $1,000 in savings bonds at 6.75% interest compounded semi-annually. How much will she earn in 15 years?

Back

$2,706.86

Front

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

Back

The number of times interest is compounded per year.

Front

What is the total amount paid after 30 years on a $195,000 loan at 4.3% interest compounded annually?

Back

$689,546.99 (Total Amount = Principal + Interest).