REVIEW FOR UNIT 4 FLASHCARD LOANS VOCABULARY AND SIMPLE INTEREST

Front

What is the formula for simple interest?

Back

I = Prt, where I is the interest, P is the principal amount, r is the rate of interest (in decimal), and t is the time in years.

Front

How do you convert a percentage to a decimal for use in the simple interest formula?

Back

To convert a percentage to a decimal, divide the percentage by 100.

Front

If Leroy buys a used car for $7500 and has saved $1500 for the down payment, how much will he have to finance?

Back

$5000

Front

Calculate the simple interest earned for a principal of $2,000 at an 8% rate for 5 years.

Back

$800

Front

If Timmi puts $300 in a bank account earning 4% interest, how much will she earn in interest in 1 year?

Back

$12

Front

What does 'principal' mean in the context of loans and interest?

Back

Principal is the original sum of money borrowed or invested, excluding any interest or profits.

Front

What is the meaning of 'interest rate'?

Back

The interest rate is the percentage of the principal charged as interest for a specific period.

Front

Define 'financing' in the context of loans.

Back

Financing refers to the act of providing funds for business activities, making purchases, or investing.

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal and also on the accumulated interest.

Front

How do you calculate the total amount to be repaid on a loan?

Back

Total Amount = Principal + Interest.