Compound Interest-mixed

Front

What is Compound Interest?

Back

Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.

Front

How is Compound Interest calculated?

Back

Compound Interest = P(1 + r/n)^(nt) where P = principal amount, r = annual interest rate (decimal), n = number of times interest applied per time period, t = number of time periods.

Front

What does 'compounded annually' mean?

Back

Compounded annually means that the interest is calculated once a year on the principal and any accumulated interest.

Front

What is the formula for the total amount A after t years with 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 you invest $1000 at an interest rate of 5% compounded annually for 4 years, how much will you have?

Back

$1215.51

Front

What is the total balance for a loan of $400 compounded annually at a rate of 11% for 4 years?

Back

$607.23

Front

How much interest is earned on $20 at a rate of 0.7% compounded annually for 2 years?

Back

$0.28

Front

What is the total amount in the account if $2750 is invested at 8% for 2 years compounded annually?

Back

$3207.60

Front

What is the principal in a compound interest problem?

Back

The principal is the initial amount of money that is invested or loaned.

Front

What does 'interest rate' refer to in finance?

Back

The interest rate is the percentage of the principal charged as interest for a loan or paid on an investment.