Simple and Compound Interest

Front

What does the P in I = PRt mean?

Back

Principal

Front

What does the t in the simple interest formula I = Prt represent?

Back

Time, in years

Front

What is the formula for calculating simple interest?

Back

I = Prt

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 and also on the accumulated interest.

Front

If you invest $1,000 at a simple interest rate of 5% per year, how much interest will you earn in 3 years?

Back

$150

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 $2,000 is invested at an annual interest rate of 6% compounded annually, what will be the balance after 5 years?

Back

$2,686.63

Front

How do you convert a decimal to a percent?

Back

Multiply the decimal by 100 and add a percent sign.

Front

What is 0.75 as a fraction?

Back

3/4

Front

If you have $500 in a savings account with a 4% annual interest rate, how much interest will you earn in one year?

Back

$20