Simple and Compound Interest

A person (or institution) who invests the money or makes the fund available.

• Lender or creditor

• borrower or debtor

• rate

• principal

Amount of money borrowed or invested on the origin date.

• maturity value

• interest

• rate

• principal

It is calculated on the principal, or original, amount of a loan.

• simple interest

• interest

• compound interest

• maturity value

The simple interest formula is I = Prt. What does the t represent?

• principal amount

• interest

• time

• rate

Mark Aldrian borrows $1200 from a bank with 8% simple interest per year.  How much will he have to pay back total in 2 years?

 

              

• $150

• $192

• $1350

• $1392

What is the principal for a loan that has an earned interest of $3500 with an annual rate of 10% for 5 years?

          

 

 

              

• $7,000

• $5,000  

• $6,500

• $3750