Applications Flashcards
1
Q
What is interest?
A
Interest is money paid for the use of other money
2
Q
What is simple interest?
A
Interest based only on the ititial deposit without compounding.
End value = P[1+(rt)/100]
3
Q
What is the principal in an interest problem?
A
Principal is the initial deposit in an investment.
4
Q
What is compound interest?
A
Compound interest is interest that is added at regular intervals. The second interest is based on the principal and the first interest and so on.
End value = P(1 + r/100)^t
Or
End value = P(1 + r/(100n))^(t*n)
If the interest is compounded n times per year. t is the time in years, p is the principal, and r is the interest rate
