Simple and compound interest

Front

interest is _________

Back

extra money paid for borrowing

Front

What is the formula for calculating simple interest?

Back

Simple Interest = Principal × Rate × Time

Front

What does 'compounded quarterly' mean?

Back

Interest is calculated and added to the principal four times a year.

Front

How many times a year is interest compounded if it is compounded semi-annually?

Back

2 times a year

Front

If you invest $1,000 at an interest rate of 5% compounded annually, how much will you have after 3 years?

Back

$1,157.63

Front

Emilio borrows $1200 from a bank with 8% simple interest per year. How much will he have to pay back total in 2 years?

Back

$1392

Front

Caiden earned $475 from mowing lawns last summer. He deposited this money in an account that pays an interest rate of 3.8% compounded annually. What will be his balance after 15 years?

Back

$831.10

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal, while compound interest is calculated on the principal plus any interest earned.

Front

What is the formula for compound interest?

Back

Compound Interest = Principal × (1 + Rate/Number of Compounding Periods)^(Number of Compounding Periods × Time) - Principal

Front

If you invest $2,000 at an interest rate of 4% compounded quarterly, how much interest will you earn in 5 years?

Back

$438.02