Interest

Vocabulary

100

What does the t stand for in the interest formulas?

Time, in years

200

What does the R stand for in the interest formulas?

Rate

300

What does the p stand for in the interest formulas?

Principle

400

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

500

What does the N stand for in the compound interest formula?

The # of times compounded a year

Equations

100

What is the simple interest formula?

I = PRT

200

What is the compound interest formula?

A = P(1 + r/n)^nt

300

If the rate is 4.5%, how should that be written in for interest formula?

.045

400

How would you write 6 MONTHS in the interest formula?

1/2

500

What is the n if the interest is compounded quarterly?

4

Simple Interest Formula

100

I = 

P= $1000

R= 5%

T = 3 years

150

200

I = 

P = $4,000

R = 3%

T = 4 years

$480

300

I = 

P= 210

R = 8%

T= 7 years

$117.60

400

I = 

P= 35,800

R= 8.2%

T= 3 years

$8,806.60

500

I=

P= $7,400

R= 10.5%

T= 3 MONTHS

$194.25

Compound Interest Formula

100

$1,500 at 7% compounded annually for 3 years

$1,837.56

200

$18,000 at 9% compounded semiannually for 6 years

$30,525.87

300

$12,700 at 8.8% compounded semiannually for 1 year

$13,842.19

400

$21,000 at 13.6% compounded quarterly for 4 years

$35,854.85

500

$15,000 at 7.5% compounded monthly for 5 years

$21,799.42

Continuous Interest

100

Ben deposited $6,500 in a simple interest account that pays 2.8% interest compounded continuously. If Ben leaves the money in the account for 12 years, what will his total balance?

$9,095.70

200

Kevin invests $190 in an account. There is a 2% return compounded continuously. If Kevin leaves this investment untouched for 2 years, how much money will be in the account?

$197.75

300

Viv opens a credit card that compounds interest continuously at a rate of 30% (penalty APR). She keeps a balance of $500 on the card for a year, what is the current balance of her card?

$674.93

400

An investment yields $7,095.34 after 7 years. The account has a 5% interest rate. What was the Principal balance?

$5,000

500

If an investment of $8,000 accrues $15,000 over the span of 15 years. What was the interest rate of the account assuming the investment compounds continuously?

4.2%