Interest

The simple interest formula is I=Prt.  The P represents the principal.  The principal is ___________________.  

• the amount of money borrowed or deposited
• the percent interest for his year
• the amount taxed
• the amount the bank owes you for being a customer at their bank

Beyonce went to the mall and saw a massage chair that she would have to take a loan out for $6500 to purchase.  The bank said that she could get a simple interest rate of 8% for 5 years.  What is the total amount that Beyonce will pay for the chair?

• $2600
• $910
• $9100
• $260

If you are calculating the simple interest and you are given the time in months, how can you find the time in years?

• divide 12 by the months
• divide the months by 12
• multiply 12 times the months
• change the months to a decimal

To earn as much interest as possible, you should open a savings account that earns ______ interest and has the _____ interest rate.

• compound; lowest
• compound; highest
• simple; lowest
• simple; highest

Interest can be defined as:

• a charge for lending money
• the amount owed for borrowing money
• the amount added into your savings account when opening a bank account
• a charge for convenience of accessing money in your bank

The compound interest formula is:
A = P(1 + r)^t

What does the A represent?

• The amount of interest earned.
• The amount of time that has passed.
• The total amount of money after a certain amount of time.
• The amount required to invest.

Bilbo Baggins earned $475 from walking long distances last summer. He deposited this money in an account that pays an interest rate of 3.8% compounded annually. What will be his balance after 15 years?

• $827.52
• $831.10
• $839.45
• $846.80

I = Prt where r represents the rate.  Rates must be converted into ____ before multiplying.

• fractions
• mixed numbers
• decimals

Caiden earned $475 from mowing lawns last summer. He deposited this money in an account that pays an interest rate of 3.8% compounded annually. What will be his balance after 15 year?

• $827.52
• $831.10
• $839.45
• $846.80

John just opened a savings account and wants to maximize the amount of interest he earns. Which of the following actions enable him to earn MORE interest?

• selecting an account with a lower interest rate
• leaving his money in the account for long period of time
• transferring money into his checking account each month
• closing the account after one month