Exploring Simple and Compound Interest Concepts

The video tutorial reviews four types of interest problems: two simple interest and two compound interest. It explains the formulas for simple interest (I = PRT) and compound interest (A = P(1 + r)^t) and demonstrates how to use them to solve problems. The tutorial covers finding interest only and total amounts for both simple and compound interest, using examples to illustrate each type of problem.

What formula represents simple interest?

• A = P(1 + rt)

• I = PRT

• A = P(1 + r)^t

• I = prt

How is compound interest calculated?

• A = P(1 + r)^t

• A = P(1 + rt)

• I = prt

• A = P + prt

What is the interest earned on a $1000 deposit at 6% for 4 years using simple interest?

• $220

• $260

• $240

• $200

What is the principal amount in the first simple interest example?

• $3000

• $2500

• $2000

• $1000

What is the total amount after earning simple interest on $2500 at 7% for 5 years?

• $3125

• $3375

• $3575

• $3825

To find the total amount using simple interest, what step is added to the interest calculation?

• Subtract the rate from the principal

• Add the principal to the interest

• Divide the interest by the principal

• Multiply the principal by the rate

What is the compound interest earned on a $3000 deposit at 6% for 4 years?

• $765.00

• $820.50

• $800.00

• $787.43

For compound interest, how do you find the interest earned?

• Add the rate to the principal

• Subtract the principal from the total amount

• Divide the total amount by the rate

• Multiply the principal by the time

What is the total amount after compound interest on $4500 at 7% for 5 years?

• $6400.50

• $6120.00

• $6500.00

• $6311.48

In the compound interest example, what was the initial deposit for the second problem?

• $4500

• $4000

• $3500

• $3000