Compound and Simple Interest
Flashcard
•
Mathematics
•
9th - 10th Grade
•
Practice Problem
•
Hard
Wayground Content
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15 questions
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1.
FLASHCARD QUESTION
Front
What is the formula for calculating compound interest?
Back
A = P(1 + r/n)^(nt) where A is the amount of money accumulated after n years, including interest. P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the number of years the money is invested or borrowed.
2.
FLASHCARD QUESTION
Front
What does 'simple interest' mean?
Back
Simple interest is calculated only on the principal amount, or on that portion of the principal amount which remains unpaid. The formula is I = PRT, where I is the interest, P is the principal, R is the rate of interest per year, and T is the time in years.
3.
FLASHCARD QUESTION
Front
What is the difference between compound interest and simple interest?
Back
Compound interest is calculated on the initial principal and also on the accumulated interest of previous periods, while simple interest is calculated only on the principal amount.
4.
FLASHCARD QUESTION
Front
What does 'compounded annually' mean?
Back
Compounded annually means that the interest is calculated and added to the principal once a year.
5.
FLASHCARD QUESTION
Front
If an investment of $1000 is made at an interest rate of 5% compounded annually for 3 years, what will be the total amount?
Back
A = 1000(1 + 0.05)^3 = $1157.63.
6.
FLASHCARD QUESTION
Front
What does 'semi-annually' mean in terms of compounding?
Back
Semi-annually means that interest is calculated and added to the principal twice a year.
7.
FLASHCARD QUESTION
Front
How do you calculate the total amount to be paid back on a loan with simple interest?
Back
Total Amount = Principal + Interest, where Interest = Principal x Rate x Time.
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