Compound Interest - Identify Variables

Front

What does the 'r' stand for in the compound interest formula?

Back

Rate

Front

How do you convert 4% to a decimal?

Back

.04

Front

If Karla invested $1,000 at 6.75% compounded semi-annually, what exponential equation can be used to find her earnings in 15 years?

Back

A = P(1 + r/n)^(nt) where P = 1000, r = 0.0675, n = 2, t = 15

Front

What does the 't' stand for in the compound interest formula?

Back

Time

Front

In the context of compound interest, what does 3.8% represent?

Back

Rate of interest, r

Front

What is the formula for compound interest?

Back

A = P(1 + r/n)^(nt) where A is the amount, P is the principal, r is the rate, n is the number of times compounded per year, and t is the time in years.

Front

What is the principal amount in a compound interest scenario?

Back

The initial amount of money invested or borrowed.

Front

How do you calculate the total amount after 15 years if the interest is compounded annually?

Back

Use the formula A = P(1 + r)^t.

Front

What does 'n' represent in the compound interest formula?

Back

The number of times interest is compounded per year.

Front

If an investment earns 5% interest compounded quarterly, how often is the interest applied?

Back

Every 3 months (4 times a year).