Simple and Compound Interest

Front

What is the formula for calculating Simple Interest?

Back

Simple Interest (I) = Principal (P) × Rate (R) × Time (T)

Front

How do you convert a decimal to a percent?

Back

Multiply the decimal by 100 and add a percent sign.

Front

What does 'Principal' refer to in the context of interest calculations?

Back

The Principal is the initial amount of money deposited or borrowed before interest.

Front

What is Compound Interest?

Back

Compound Interest is the interest calculated on the initial principal and also on the accumulated interest from previous periods.

Front

How is Compound Interest calculated?

Back

Compound Interest (A) = P(1 + r/n)^(nt), where P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.

Front

What does the 'R' in the formula I = PRT represent?

Back

'R' represents the annual interest rate, expressed as a decimal.

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 already been added.

Front

If $1,500 is invested at an interest rate of 8.25% compounded semiannually, what is the balance after 18 years?

Back

The balance will be $6,427.94.

Front

What is the formula to find the total amount after compound interest is applied?

Back

Total Amount (A) = Principal (P) + Compound Interest (CI) or A = P(1 + r/n)^(nt).

Front

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

Back

'n' represents the number of times interest is compounded per year.