Compound Interest

Vocabulary

Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest.

Annually means once a year (1 period).

Semi-annually means twice a year (2 periods).

Monthly means every month in a year (12 periods).

Quarterly means every three months or 4 times a year (4 periods).

Daily means every day in a year (365 periods).

Multiple Choice

What does the P stand for in this formula?

• Initial amount

• Final amount

• Rate

• Time

• The number of times compounded per year

Multiple Choice

What does the r stand for in this formula?

• Initial amount

• Final amount

• Rate

• Time

• The number of times compounded per year

Multiple Choice

What does the n stand for in this formula?

• Initial amount

• Final amount

• Rate

• Time

• The number of times compounded per year