Vocabulary
What does the t stand for in the interest formulas?
Time, in years
What is the simple interest formula?
I = PRT
I =
P= $1000
R= 5%
T = 3 years
150
$1,500 at 7% compounded annually for 3 years
$1,837.56
Ben deposited $6,500 in a simple interest account that pays 2.8% interest annually. If Ben leaves the money in the account for 12 years, how much interest will he earn?
$2,184
What does the R stand for in the interest formulas?
Rate
What is the compound interest formula?
A = P(1 + r/n)nt
I =
P = $4,000
R = 3%
T = 4 years
$480
$18,000 at 9% compounded semiannually for 6 years
$30,525.87
Kevin buys a leather jacket listed for $190. He receives a 15% discount at the register. What is the new price of the leather jacket?
$161.50
What does the p stand for in the interest formulas?
Principle
If the rate is 4.5%, how should that be written in for interest formula?
.045
I =
P= 210
R = 8%
T= 7 years
$117.60
$12,700 at 8.8% compounded semiannually for 1 year
$13,842.19
Viv borrows $1,500 from her uncle for 9 months at 5%. What’s the total amount she’ll pay back to her uncle?
$1,556.25
What is interest?
Money you make from a bank or investment that pays a certain amount depending on the rate and amount of money invested
How would you write 6 MONTHS in the interest formula?
1/2
I =
P= 35,800
R= 8.2%
T= 3 years
$8,806.60
$21,000 at 13.6% compounded quarterly for 4 years
$35,854.85
Jeremy borrowed $96,300 at 3% compounded annually for 8 years.
$121,989.96
What does the N stand for in the compound interest formula?
The # of times compounded a year
What is the n if the interest is compounded quarterly?
4
I=
P= $7,400
R= 10.5%
T= 3 MONTHS
$194.25
$15,000 at 7.5% compounded monthly for 5 years
$21,799.42
If you deposited $500 for four years at 6% annual interest, compounded monthly, how much money would you have saved?
$635.24