Compound Interest

Front

What does 'Semi-Annually' mean?

Back

It means occurring two times a year.

Front

What is the formula for calculating compound interest?

Back

A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount, r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the number of years the money is invested or borrowed.

Front

If Karla invests $1,000 at 6.75% interest compounded semi-annually, how much will she have after 15 years?

Back

$2,706.86

Front

What does the $475 represent in Jay'den's investment?

Back

It represents the Principal or initial value, P.

Front

What is the annual interest rate in decimal form for 3.8%?

Back

0.038

Front

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

Back

2 times.

Front

What is the total amount after 15 years if $1,000 is invested at 6.75% compounded semi-annually?

Back

$2,706.86

Front

What is the principal amount in the context of compound interest?

Back

The principal amount is the initial sum of money invested or borrowed.

Front

What does 'compounded annually' mean?

Back

It means that the interest is calculated and added to the principal once a year.

Front

If an investment earns 5% interest compounded quarterly, how many times is interest compounded in a year?

Back

4 times.