General Mathematics - Business Math Flashcards
What is interest?
It is the amount paid for the use of another amount of money
What type of interest is gained because of money being put in (the bank)
Earning interest
What is the principal?
It is the base in which interest is computed
What type of interest is paid when borrowing money?
Paying interest
What is a term?
It is the unit of time for which the principal is loaned for
What is the interest rate?
It is the multiplier expressed as percent of the principal to be paid each term
What is the maturity value?
It is the sum of the principal and the interest that accumulated over the agreed term
What are two ways to calculate interest?
Simple interest and compound interest
What is simple interest?
It refers to the amount computed on the original amount called the principal P, at a given rate r, for a period of time t in years
TL;DR Only the principal earns interest for the duration of the term
Why is knowing business math important?
It is needed for financial literacy
