Interest Calculation Quiz
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Questions and Answers

What is the formula for calculating simple interest?

  • $a(1+r)^t$ (correct)
  • $a(1+ rac{r}{n})^{nt}$
  • $Pe^{rt}$
  • $a(1+ rac{r}{2})^{2t}$

Compound interest is calculated only once a year.

False (B)

What does the variable 'r' represent in the compound interest formula?

growth rate

The formula for compound interest compounded continuously is ______.

<p>$A = Pe^{rt}$</p> Signup and view all the answers

Match the compounding frequency with its corresponding formula:

<p>Semi annually = $a(1+ rac{r}{2})^{2t}$ Compounded quarterly = $a(1+ rac{r}{4})^{4t}$ Monthly = $a(1+ rac{r}{12})^{12t}$ Compounded continuously = $A = Pe^{rt}$</p> Signup and view all the answers

Flashcards

Simple Interest

A fee calculated only on the initial amount borrowed or invested.

Compound Interest

Interest calculated multiple times per year, making the amount grow faster.

Compound Interest Formula

The formula for calculating compound interest when the interest is compounded a specific number of times per year.

Continuously Compounded Interest Formula

The formula for calculating continuously compounded interest, where the interest is calculated infinitely many times per year.

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Principal (P)

The initial amount borrowed or invested, represented by 'P' in the compound interest formulas.

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