Flashcards on Interest: simple and compound
Simple and Compound Interest Explained: Formulas & Examples
Tap to flip · Swipe to navigate
Výpočet úroku
19 cards
Card 1
Question: What is the principal (G₀ or P) in interest calculations?
Answer: The initial amount of money invested, saved, or borrowed; the base on which interest is calculated.
Card 2
Question: What does the interest rate (i or r) represent?
Answer: Expressed as a percentage, it's the proportion of the principal charged as interest over a specific period, typically an annual rate.
Card 3
Question: What is a compounding period (n)?
Answer: The frequency at which interest is calculated and added to the principal (e.g., annually, semi-annually, quarterly, monthly, daily).
Card 4
Question: How is simple interest calculated?
Answer: Only on the initial principal amount; the interest earned or paid does not get added back to the principal for subsequent calculations.
Card 5
Question: What is the formula for calculating total simple interest (I)?
Answer: I = P · r · t (where P = Principal, r = Annual interest rate, t = Time in years)
Card 6
Question: What is the formula for the future value (FV) with simple interest?
Answer: FV = P · (1 + r · t)
Card 7
Question: If 10,000 Kč is invested at a simple annual interest rate of 3% for 5 years, how much simple interest is earned?
Answer: 1,500.00 Kč (10,000 · 0.03 · 5)
Card 8
Question: If 10,000 Kč is invested at a simple annual interest rate of 3% for 5 years, what is the total amount (future value) after 5 years?
Answer: 11,500.00 Kč (10,000 + 1,500)
Card 9
Question: How does compound interest differ from simple interest?
Answer: Compound interest is calculated on the initial principal and on all accumulated interest from previous periods, leading to exponential growth.
Card 10
Question: What is the general formula for compound interest when compounded once per year?
Answer: Gₙ = G₀ · (1 + i)ⁿ (where Gₙ = Future value, G₀ = Principal, i = Annual interest rate, n = Number of years)