Simple vs Compound Interest

What is the formula for calculating simple interest?

• Principal amount / Interest rate / Time

• Principal amount x Interest rate x Time

• Principal amount + Interest rate + Time

• Principal amount - Interest rate - Time

If the principal amount is $1000, the interest rate is 5%, and the time period is 2 years, what is the simple interest?

• 100

• 50

• 200

• 500

What is the formula for calculating compound interest?

• A = P(1 + r/n)^(nt) - P

• A = P(1 - r/n)^(nt)

• A = P(1 + r/n)^(t)

• A = P(1 + r)^(nt)

If the principal amount is $2000, the interest rate is 8%, and the time period is 3 years, what is the compound interest?

• $600.00

• $519.42

• $400.00

• $800.00

What is the difference between simple interest and compound interest?

• Simple interest is calculated on a daily basis, while compound interest is calculated on a yearly basis.

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

• Simple interest is always higher than compound interest.

• Simple interest is only applicable to short-term loans, while compound interest is applicable to long-term loans.

If the principal amount is $5000, the interest rate is 6%, and the time period is 4 years, what is the total amount after simple interest?

• $5600

• $6000

• $5800

• $6200

If the principal amount is $3000, the interest rate is 7%, and the time period is 5 years, what is the total amount after compound interest?

• $4000.00

• $3840.25

• $3500.00

• $4200.50

What is the difference between the principal amount and the total amount after simple interest?

• The difference between the principal amount and the total amount after simple interest is the principal amount.

• The difference between the principal amount and the total amount after simple interest is the interest earned.

• The difference between the principal amount and the total amount after simple interest is the total amount.

• The difference between the principal amount and the total amount after simple interest is the interest rate.

What is the difference between the principal amount and the total amount after compound interest?

• The principal amount is not affected by compound interest, while the total amount after compound interest increases exponentially over time.

• The principal amount is fixed, while the total amount after compound interest can vary depending on the interest rate and time period.

• The total amount after compound interest includes the principal amount and the accumulated interest over time.

• The principal amount is the initial investment, while the total amount after compound interest is the final value of the investment.

If the principal amount is $4000, the interest rate is 9%, and the time period is 6 years, what is the difference between the simple interest and the compound interest?

• $200.00

• $186.72

• $300.00

• $400.00