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Questions and Answers
What is the formula for calculating simple interest?
What is the formula for calculating simple interest?
What type of interest remains constant throughout the term?
What type of interest remains constant throughout the term?
Who is the person or institution that invests the money or makes funds available known as?
Who is the person or institution that invests the money or makes funds available known as?
What is an annuity in which the periodic payment is made at the beginning of each interval?
What is an annuity in which the periodic payment is made at the beginning of each interval?
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Interest that is computed on the principal. The interest remains constant throughout the term.
Interest that is computed on the principal. The interest remains constant throughout the term.
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An annuity in which the periodic payment is made at the beginning of each interval
An annuity in which the periodic payment is made at the beginning of each interval
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Date on which money is received by the borrower
Date on which money is received by the borrower
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Annuity in which the periodic payment is made at the end of each payment interval.
Annuity in which the periodic payment is made at the end of each payment interval.
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Repayment date or maturity date – date on which the money borrowed, or loan is to be completely repaid
Repayment date or maturity date – date on which the money borrowed, or loan is to be completely repaid
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Which type of interest is computed on the principal and compounded throughout the term?
Which type of interest is computed on the principal and compounded throughout the term?
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What does the term 'ordinary annuity' refer to?
What does the term 'ordinary annuity' refer to?
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What is the equivalent interest rate per payment denoted by in the annuity formulas?
What is the equivalent interest rate per payment denoted by in the annuity formulas?
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Which date is defined as the date on which money is received by the borrower?
Which date is defined as the date on which money is received by the borrower?
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Study Notes
Types of Interest
- Simple interest is calculated using the formula for simple interest.
- Simple interest remains constant throughout the term.
Annuities
- An annuity in which the periodic payment is made at the beginning of each interval is called an annuity due.
- An ordinary annuity is an annuity in which the periodic payment is made at the end of each interval.
- The equivalent interest rate per payment in annuity formulas is denoted by i.
Loan Terms
- The lender, or the person or institution that invests the money or makes funds available, is known as the investor.
- The date on which money is received by the borrower is called the issue date.
- The repayment date or maturity date is the date on which the money borrowed, or loan, is to be completely repaid.
Compound Interest
- Compound interest is computed on the principal and compounded throughout the term.
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Description
Test your knowledge of the simple interest formula and its components with this quick review quiz. Understand the concepts of principal, rate, and time, and how they contribute to calculating simple interest.
