Exploring Compound Interest Concepts

What type of function is used to model scenarios like compound interest?

• Quadratic function

• Logarithmic function

• Linear function

• Exponential function

What does the variable 'P' represent in the compound interest formula?

• Period of time

• Payment interval

• Profit gained

• Principal amount

What does the variable 'n' represent in the compound interest formula?

• Number of compounding periods per year

• New principal amount

• Nominal interest rate

• Net gain

What does the variable 't' stand for in the context of compound interest?

• Term of deposit

• Transaction number

• Time in years

• Total interest

How often was the interest compounded in Kimberly's CD?

• Annually

• Biannually

• Quarterly

• Monthly

What is the principal amount invested in Kimberly's CD?

• $30,000

• $3,000

• $33,000

• $300

What is the annual interest rate for Kimberly's CD?

• 12%

• 10%

• 8%

• 5%

After 5 years, what is the total amount accumulated in Kimberly's CD?

• $4,457,840

• $445,784

• $44,578.40

• $4,457.84

How much total interest is earned on Kimberly's CD after 5 years?

• $145,784

• $1,457,840

• $14,578.40

• $1,457.84

Why is it important to understand each component of the compound interest formula?

• All of the above

• To calculate the correct interest rate

• To ensure proper investment decisions

• To predict future financial scenarios accurately