Test review Simple and Compound Interest

Front

What is Simple Interest?

Back

Simple Interest is calculated using the formula: I = P * r * t, 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

What is Compound Interest?

Back

Compound Interest is calculated on the initial principal and also on the accumulated interest from previous periods. The formula is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, 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

How do you calculate the total amount in an account with Simple Interest?

Back

Total Amount = Principal + Simple Interest. Simple Interest can be calculated using the formula: I = P * r * t.

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How do you calculate the total amount in an account with Compound Interest?

Back

Total Amount = Principal * (1 + r/n)^(nt). This includes both the principal and the interest earned.

Front

What is the formula for calculating Simple Interest?

Back

I = P * r * t, where I is the interest, P is the principal, r is the rate of interest, and t is the time in years.

Front

What is the formula for calculating Compound Interest?

Back

A = P(1 + r/n)^(nt), where A is the total amount, 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

If Kaelynn invests $15,000 at 4% simple interest for 3 years, how much interest does she earn?

Back

$1,800.

Front

If Gael deposits $650 at 3.5% simple interest for 2 years, what is the total balance?

Back

$695.50.

Front

After 8 years, who has more money: Sarah with 2% compound interest or Claire with 2% simple interest on $800?

Back

Sarah's account will have about $9.33 more than Claire's account.

Front

How much interest will Juan pay on a $27,000 loan at 4.15% compounded annually for 5 years?

Back

$6,087.21.