Ch 5 Sim Int

Question 1

Simple Interest

Answer 1

I = P * r * t

Question 2

Future Value

Answer 2

FV = P (1 + r * t)

Question 3

Initial/Original Investment (Present Value)

Answer 3

FV = P (1+ r * t) —-THEN — FV / (1 + r * t) = P

Question 4

Add On Loan

Answer 4

FV = P (1 + r * t)

FV / Number of Payments to be made

Question 5

AVG Daily Balance (CC Interest)

Answer 5

Account Balance * Number of days with no purchase or payment. Add all AVG Daily Blnces and divide by total days to get Principal

Question 6

Financial Charge (CC Interest)

Answer 6

I = P * r * t —— Used to get your final interest on CC interest problems. — P is from all AVG Dly Blnces divided by total days