Compound Interest Quiz
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Questions and Answers

What is the formula for calculating compound interest?

  • A = P(1 + r)^t
  • A = P(1 - r/n)^nt
  • A = P + rt
  • A = P(1 + r/n)^nt (correct)

    • How does compound interest differ from simple interest?

  • Interest is only calculated on the principal amount in compound interest
  • The time period has no effect on compound interest
  • Compound interest includes interest on interest (correct)
  • The interest amount remains constant in compound interest

    • What does 'n' represent in the compound interest formula?

  • Number of years the money is invested for
  • Principal amount
  • Number of times interest is compounded per year (correct)
  • Annual interest rate

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