Interest and the Rule of 72

What is the rule of 72?

• The rule of 72 is a formula used to estimate the time it takes for an investment to triple in value.

• The rule of 72 is a formula used to estimate the time it takes for an investment to halve in value.

• The rule of 72 is a formula used to estimate the time it takes for an investment to quadruple in value.

• The rule of 72 is a formula used to estimate the time it takes for an investment to double in value.

Tags

CCSS.7.RP.A.3

Give an example of an application of compound interest.

• Credit cards

• Insurance policies

• Investments and loans

• Savings accounts

How is simple interest calculated?

• By dividing the principal amount by the interest rate

• By adding the principal amount and the interest amount

• By subtracting the interest amount from the principal amount

• By multiplying the principal amount, the interest rate, and the time period for which the interest is calculated.

Tags

CCSS.7.RP.A.3

Compare compound interest and simple interest.

• Compound interest is only applicable for short-term investments.

• Compound interest takes into account the accumulated interest while calculating the interest, resulting in higher returns than simple interest.

• Simple interest takes into account the accumulated interest while calculating the interest, resulting in higher returns than compound interest.

• Compound interest and simple interest are the same thing.

Tags

CCSS.7.RP.A.3

What is the difference between simple interest and compound interest?

• Simple interest is calculated on the initial principal only, while compound interest is calculated on the initial principal plus any interest accumulated.

• Simple interest is calculated on the initial principal plus any interest accumulated, while compound interest is calculated on the initial principal only.

• There is no difference between simple interest and compound interest.

• Simple interest and compound interest are calculated using different formulas.

Tags

CCSS.7.RP.A.3

What is the effect of increasing the time period on the amount of compound interest earned?

• The amount of compound interest decreases

• The amount of compound interest remains the same

• The amount of compound interest increases

• The amount of compound interest first increases, then decreases

What is the effect of increasing the interest rate on the amount of simple interest earned?

• The amount of simple interest decreases

• The amount of simple interest remains the same

• The amount of simple interest increases

• The amount of simple interest first increases, then decreases

Tags

CCSS.7.RP.A.3