Chapter 9 Vocab
In the simple interest formula, what does the 'I' stand for?
I=P*R*T
What is Interest
This is the amount of simple interest on a loan given the principal is $7,000, rate of 15%, and time of 2 years.
What is $2,100
Using compound interest, 'P' represents this value.
What is the principal.
This is the interest per period for a loan at a rate of 8% compounded annually.
What is 8%
A loan has a principal of $20,000 at a rate of 6% compounded annually for 4 years. This is the future value of the loan.
What is $25,249.54
In simple interest, the 'P' variable stands for this.
What is the Principal
This is the amount of interest on a simple interest loan given that the principal is $11,000, a rate of 5%, and a time of 4 months.
What is $183.33
If a loan is compounded quarterly, then it is compounded this amount of times in a year.
What is 4 times a year.
A loan is taken out for 6 years and compounded quarterly, this is the number of periods for the loan.
What are 24 periods.
This is the present value of a loan if they need $15,000 in 5 years at a rate of 6% compounded annually.
What is $11,208.90
What does 'M' stand for in the following formula?
What is Maturity Value
This is the amount of time in months a simple loan was given when it earned $225 in interest, a principal amount of $3,000, and a rate of 15%.
What are 6 months
This is the value needed today to make funds be true in the future.
What is the present value
A loan is taken out at a rate of 12% and compounded monthly. This is the amount of interest per period.
What is 1%
This is the future value of a loan given that $10,500 is deposited into an account at a rate of 2% compounded daily for 3 years.
What is $11,149.27
The variable 'T' is always given in the amount of this.
What are years.
This is the maturity value of a loan knowing it was taken out for $114,523 and gained $11,319 in simple interest.
What is $125,842
In compound interest, this variable represents the number of compounding periods in 1 year.
What is 'n'
A loan is taken out for 3 years and compounded daily(assume 365 days a year), this is the number of periods for the loan.
What is 1,095 periods
$17,890 is deposited into a savings account for 125 days that earns 3.75% interest compounded daily, this is the future value of the account.
What is $18,121.22
Problems using the banker's discount use this variable to represent the interest.
What is variable B.
This is the banker's discount given that a note has a face value of $142,000, a rate of 5.6%, and is good for 217 days. (assume 365 days)
What is $4,727.63
This is type of interest is found multiple times for the life of the loan.
What is compound interest.
A loan is taken out for 3 years at rate of 12% compounded quarterly, this is the interest per period and total number of periods of the loan.
What are 12 periods and 3% per period
A savings account has $5,000 deposited at a rate of 12% compounded daily for 7 months, this is the future value of the account?
What is $5,362.48