Simple & Compound interest

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

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

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

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

What is the formula for simple interest?

• A=P(1+r)^t
• I=Prt
• I=P(1+r)t
• A=Prt

Ann puts $300 in a bank account earning 4% interest.  How much will she earn in interest in 1 year?

• 4
• 8
• 12
• 16

What does P stand for in I = Prt ?

• percent
• partner
• percent change
• principal

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 higher interest rate
• leaving his money in the account for a long period of time
• transferring money into his checking account each month
• higher interest rate AND leaving money in for a longer time

What is important about how time is calculated in I= Prt ?

• it must be in months
• it must be in years
• it is not calculated

Which type of interest results in faster growth of money over time?

• A .Simple interest

• B. Compound interest

• C. Both are the same

• D. Depends on the interest rate

Maria wants to invest in a fixed deposit account. Which of the following will help her earn the most interest?

• choosing a longer investment term

• selecting a lower interest rate

• withdrawing interest monthly

• investing in a savings account instead

In the formula A = P(1 + r)^t, what does A represent?

• the total amount after interest

• the principal amount

• the interest earned

• the rate of interest