Exploring Simple and Compound Interest Concepts

This video tutorial covers the basics of simple and compound interest calculations. It begins with an introduction to simple interest, explaining how to calculate the ending balance using a fixed interest rate over a period of time. The tutorial provides several examples to illustrate the process. It then transitions to compound interest, explaining how interest is calculated on an increasing principal amount. The video includes examples of compound interest calculations, demonstrating how to apply the formula for different compounding periods. The tutorial aims to enhance understanding of interest calculations through practical examples.

What is the ending balance using simple interest for $34,100 at 4% for 3 years?

• $38,192

• $36,500

• $37,100

• $39,000

What is the formula for calculating simple interest to find the ending balance?

• Original amount / (1 + (Interest rate * Time))

• Original amount - (Interest rate * Time)

• Original amount + (Interest rate * Time)

• Original amount * (1 + (Interest rate * Time))

How much interest is added to the original amount in simple interest calculation?

• Triple the first year's interest

• Interest of each year

• No interest is added

• Only first year's interest

What is the ending balance using compound interest for $7,300 at 7% compounded semi-annually for 3 years?

• $9,000.00

• $8,750.00

• $8,973.56

• $8,500.00

How does compounding frequency affect the total value of the investment?

• Higher frequency results in higher total value

• Frequency has no effect on the total value

• Lower frequency results in higher total value

• Only annual compounding increases the total value

What is the new percentage used for semi-annual compounding of a 7.9% annual interest rate?

• 15.8%

• 7.9%

• 1.975%

• 3.95%

For quarterly compounding, how is the annual interest rate divided?

• By 4

• It is not divided

• By 2

• By 12

What is the total value after compounding $21,000 at 13.6% quarterly for 4 years?

• $40,000.00

• $25,000.00

• $30,000.00

• $35,854.85

What is the effect of compounding interest semi-annually on a $12,700 investment at 8.8% for one year?

• $12,800.00

• $14,000.00

• $13,842.19

• $13,500.00

What is the ending balance for an investment of $130 at 9.4% compounded quarterly for two years?

• $156.55

• $145.00

• $160.00

• $150.00