Conversion
7% to decimal
0.07
Formula for Simple Interest
I = Prt
If Orly invested 60,000.00 pesos in a bank account and it earns 3,000.00 pesos interest, what will be the maturity value?
63 000.00 pesos
What is simple interest?
Interest is charged only on the principal.
In Simple Interest formula (I=Prt), what P stands for?
Principal
If the time is 10½ years, what should we substitute to t?
10.5 years
Formula for Compound Interest when it is compounded annually
A = P(1+r)^t
A loan institution charges 12% simple interest for a 3-year, $60 000 loan. What is the simple interest?
$21 600.
Explain Compound Interest
Interest is charged on the principal and previously earned interest.
It is charged only on the loan amount called principal.
Simple Interest
convert 12½% to decimals
0.125
Formula for Compound Interest when it is compounded quarterly, semi-annually, or monthly?
A = P(1+r/n)^nt
If $10 000 is invested at 4.5% simple interest, how long will it take to grow to $11 800?
4 years
Explain why we divide by 360 days if the given problem uses ordinary interest.
We assume that each month has 30 days.
is the interest on the principal and the interest of previous periods. Interest maybe compounded periodically such as annually, semi-annually, quarterly, monthly, or daily.
Compound Interest
convert 42 months to years
3.5 years
What is the formula for finding the interest if the only given values are the principal and the maturity value?
Interest is equals to Maturity Value subtracted by the Principal.
What amount must be invested in order to have $128 376.52 after 8 years if money is worth 6% compounded semi-annually?
P = $80 000.003 or
P = $80 000.00
Explain how the second and third formulas for maturity value were derived.
A = P + I
A = P + Prt (substitute I = Prt)
A = P(1+rt) (factor out the P)
Quarterly means every how many months?
Every three months
Convert 205% to decimals
2.05
Mention the three formulas for Maturity Value
A = P+I
A = P+Prt
A = P(1+rt)
If Xean's deposit of $1,200.00 earns 5% annual interest, compounded semi-annually. How much money will she have after 10 years?
$1 968.00
What is the main difference between Simple Interest and Compound Interest?
Simple interest is charged only on the principal, while compound interest is charged on the principal and the previously earned interest.
How many times is interest added when it is compounded quarterly?
4 times