Compound Interest Practice

Front

What is the fraction and decimal for 25%?

Back

.25 and 1/4

Front

Find the balance in the account after the given period: $3400 principal earning 3.6% compounded annually after 2 years.

Back

$3,649.21

Front

When calculating interest, how do you write the percent?

Back

a decimal

Front

Change 4% to a decimal.

Back

.04

Front

Steve deposited $5,000 in a savings account that pays 4% interest compounded annually. Which formula could be used to find the value of the account after 3 years?

Back

A = 5,000(1 + 0.04)³

Front

What is compound interest?

Back

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

Front

How do you convert a percentage to a decimal?

Back

Divide the percentage by 100.

Front

What is the formula for compound interest?

Back

A = P(1 + r/n)^(nt) where A is the 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 you invest $1,000 at an interest rate of 5% compounded annually, how much will you have after 3 years?

Back

$1,157.63

Front

What does 'compounded annually' mean?

Back

Interest is added to the principal once a year.