FA_6_Review

Front

What is compound interest?

Back

Compound interest is the interest calculated on the initial principal and also on the accumulated interest from previous periods. It is typically calculated annually.

Front

How do you calculate compound interest?

Back

The formula for compound interest is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount, r is the annual interest rate, n is the number of times that interest is compounded per year, and t is the number of years.

Front

What is simple interest?

Back

Simple interest is calculated only on the principal amount, or on that portion of the principal amount which remains unpaid.

Front

How do you calculate simple interest?

Back

The formula for simple interest is 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

What is the formula to find the total amount to be paid back on a loan with simple interest?

Back

Total Amount = Principal + Interest, where Interest = PRT.

Front

What does slope represent in a graph?

Back

Slope represents the rate of change of a line, indicating how much the y-value changes for a unit change in the x-value.

Front

How do you calculate the slope of a line given two points (x1, y1) and (x2, y2)?

Back

Slope (m) = (y2 - y1) / (x2 - x1).

Front

What is the significance of the interest rate in loans?

Back

The interest rate determines how much extra money will be paid back on top of the principal amount borrowed.

Front

What is the difference between fixed and variable interest rates?

Back

A fixed interest rate remains the same throughout the term of the loan, while a variable interest rate can change based on market conditions.

Front

What is the purpose of saving for education?

Back

Saving for education helps cover tuition and other expenses, reducing the need for loans and financial stress.