Formulas

Question 1

Simple Interest

Answer 1

I = PRT

Amount = P + I

(I = interest accumulated)
(P = initial principal amount)
(R = interest rate)
(T = number of periods elapsed)
(A = final amount)

Question 2

Compound Interest

Answer 2

A=P(1+r/n)^(nt)

A = final amount
P = initial principal amount
r = interest rate
n = number of times interest is applied per period
t = number of periods elapsed

Ex: Let’s apply this formula to the example above, 3.875% interest, compounding monthly on a $10,000 balance:

P = 10000 (deposit amount)
r = .03875 (the 3.875% interest rate in decimal form)
n = 12 (months within the time period) 
t = 1 (time period elapsed— in years)

Plugging the above information into the formula gives us:
A = 10,000.00(1 + 0.03875/12)(12)(1)

Question 3

When you see evenly spaced sets, what formula should you think to use?

Answer 3

sum = n * avg = ((last - first)/iteration + 1) ((last +first)/2)

Question 4

What equation might be handy to estimate averages?

Answer 4

total differential below the avg = total differential above the average

Question 5

How should I approach questions that ask “what MUST be true” versus questions that ask “what could be true”?

Answer 5

what MUST be true: look for a value that makes the statement false

what COULD be true: look for a value that makes the statement true