Compound Interest

Front

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

Back

The principal amount (original amount)

Front

What do you do after finding 'A' using the formula A=P(1+r)^t to find the amount of interest earned?

Back

Subtract P (original amount) from A (total amount)

Front

Calculate the total amount in an account after 8 years if $360 is invested at an interest rate of 5.5% compounded annually.

Back

$552.49

Front

How much will Henry have in his college savings account after 5 years if he deposits $750 at an 8.5% interest rate compounded annually?

Back

$1127.74

Front

What is the total amount Jacob owes after borrowing $500 for 5 years at a 2.5% interest rate compounded annually?

Back

$565.70

Front

Define compound interest.

Back

Interest calculated on the initial principal and also on the accumulated interest from previous periods.

Front

What is the formula for calculating compound interest?

Back

A = P(1 + r)^t

Front

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

Back

The total amount after interest has been applied.

Front

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

Back

The interest rate (as a decimal) per time period.

Front

If an investment of $1000 is compounded annually at a rate of 4% for 3 years, what is the total amount?

Back

$1124.86