Concept of Interest Flashcard

Front

What is the simple interest on a principal of 1,000 for 3 years at an annual interest rate of 5%?

Back

150

Front

If you invest 4,000 at an annual interest rate of 5%, compounded monthly, for 2 years, what is the total amount (principal + interest) after 2 years?

Back

4,410

Front

Which of the following best describes simple interest?

Back

Interest is calculated only on the initial principal, not on accumulated interest.

Front

If a principal of 5,000 is invested at an interest rate of 6% compounded quarterly for 3 years, how many times will the interest be compounded?

Back

12 times

Front

Which of the following statements is true about interest?
The longer the time period, the less the interest earned.
Simple interest increases more rapidly than compound interest as time passes.
Compound interest will generally result in more interest earned over time than simple interest for the same principal and interest rate.
Interest rates do not impact the amount of interest earned

Back

Compound interest will generally result in more interest earned over time than simple interest for the same principal and interest rate.