Asset or Liability
Student Loan
Liability
What does Principal mean?
The original amount of money borrowed or invested
What does the A stand for in the Compound Interest formula?
Account Balance
How do you calculate Net Worth?
Assets - Liabilities
What is the percentage that is added on to a purchase at the store?
Sales Tax
What you own
Asset
Principal: $100; Rate: 5%; Time: 2 years. What is the interest?
$10
Principal: $100; Rate: 5%; Time: 2 years. Write the equation for compound interest.
A=100(1+0.05)^2
If your monthly income is $5,000 and you spend $500 on food, what percent are you spending on food?
10%
What kind of tax is taken out of your paycheck?
Income Tax
What you owe
Liability
Principal: $100; Rate: 5%; Time: 2 years. What is the total value of the account?
$110
What's the difference between simple interest and compound interest?
Simple interest gains interest on the principal ONLY, compound gains interest on principal + interest
Mrs. Taylor's assets equal $500,000 and her liabilities equal $200,000. What is Mrs. Taylor's Net Worth?
$300,000
If a television costs $100 and the sales tax is 7%, how much will you have to pay at the register?
$107
Credit Card
Liability
What type of account would you want to earn simple interest on?
Borrowed money (loans, mortgage, credit card)
What type of account would you want to earn compound interest on?
Your money (checking, savings, retirement account)
What does it mean to have a negative Net Worth?
You owe more than you own
Your bill at a restaurant is $50. You want to leave a 20% tip. How much is the total bill?
$60
401(k)
Asset
What is the formula for simple interest?
I=Prt
What is the formula for Compound Interest?
A=P(1+r)^t
What's the difference between fixed and variable expenses?
Fixed are the same every month, variable changes from month to month
How do you calculate sales tax?
Multiply the price by the percent and add