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Questions and Answers
What is the formula for calculating compound interest?
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?
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?
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
