post 2.6 Int3h questions

Front

What is the formula for calculating the future value of an investment compounded continuously?

Back

The formula is: FV = Pe^(rt), where FV is the future value, P is the principal amount, r is the interest rate (as a decimal), and t is the time in years.

Front

How do you convert a percentage to a decimal?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 6.75% becomes 0.0675.

Front

What is the future value of an investment of $4,000 at an interest rate of 3% compounded continuously for 4 years?

Back

The future value is approximately $4,509.99.

Front

What is the future value of $1,500 invested at an interest rate of 8.25% compounded semiannually for 18 years?

Back

The future value is approximately $6,427.94.

Front

What does 'compounded quarterly' mean in terms of interest calculation?

Back

Compounded quarterly means that interest is calculated and added to the principal four times a year.

Front

If the principal is $999, the interest rate is 5.45%, and the time is 19 years, what is the future account balance when compounded quarterly?

Back

The future account balance is approximately $2,794.10.

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any interest that has been added to it.

Front

What is the formula for calculating the future value of an investment compounded semiannually?

Back

The formula is: FV = P(1 + r/n)^(nt), where n is the number of times interest is compounded per year.

Front

What is the significance of the 'n' in the compound interest formula?

Back

The 'n' represents the number of times interest is compounded in a year.

Front

How do you calculate the total amount of interest earned on an investment?

Back

Total interest earned can be calculated by subtracting the principal from the future value: Interest = FV - P.