Unit 3 - Which Formula???

Front

What is simple interest?

Back

Simple interest is calculated using the formula: I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year, and T is the time in years.

Front

How do you calculate compound interest?

Back

Compound interest is calculated using the formula: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, P is the principal amount, r is the annual interest rate, n is the number of times that interest is compounded per year, and t is the number of years.

Front

What is the formula for future value in compound interest?

Back

The future value (FV) in compound interest is given by FV = P(1 + r/n)^(nt).

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

How do you find the total amount after a certain number of years with simple interest?

Back

Total Amount = Principal + Interest, where Interest = PRT.

Front

What is the formula for calculating daily deposits to reach a savings goal?

Back

To find daily deposits, use the formula: Daily Deposit = Future Value / [(1 + r/n)^(nt) - 1] * (n/t).

Front

What is the significance of the compounding frequency?

Back

The compounding frequency affects how often interest is calculated and added to the principal, impacting the total amount of interest earned.

Front

How do you calculate the interest earned on an investment?

Back

Interest Earned = Total Amount - Principal.

Front

What is the formula for calculating the amount needed to save for a future goal?

Back

Amount Needed = Future Value / (1 + r/n)^(nt).

Front

What is the role of the interest rate in savings and loans?

Back

The interest rate determines how much interest will be paid on loans or earned on savings over time.