When we have the Total Amount (A) if we need to calculate the interest (I)...

We need to substract the Principal

The initial amount of money invested

The extra amount of money made over the time

What does the simple interest do?

Applies the same interest each year

The percentage of interest to be applied every day

What does the compounded interest do?

Applies a growing Principal each year

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Financial Literacy

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Questions 18

Answers

1
The formula for the simple interest is...
I = P ⋅ r ⋅ t
A = P ⋅ r ⋅ t
I = P ⋅ (1 + r)t
A = P ⋅ (1 + r)t
2
The formula for the compounded interest is...
I = P ⋅ (1 + r)t
A = P ⋅ (1 + r)t
I = P ⋅ r ⋅ t
A = P ⋅ (1 + r)t
3
When we have the Total Amount (A) if we need to calculate the interest (I)...
We need to add the Principal
We need to add the total
We need to substract the Principal
We need to substract the total
4
What type of interest do you know?
Interest and Total amount
Long term and short term
Simple and Complex
Simple and Compounded
5
Principal is ...
The interest earned during the first year
The total amount obtained at the end of the investment
The initial amount of money invested
The total interest earned
6
Interest is ...
None of the others
The initial amount of money
The total amount of money earned
The extra amount of money made over the time
7
When we have the interest (I) and we need the Total Amount (A)
We need to add the Principal
We need to substract the total
We need to divide by 12
We need to substract the Principal
8
What is the right equation for compound interest with these values: P=$1000, r=2%, t=4 years
I = 1000 ⋅ (1 + 2%)4
A = 1000 ⋅ (1 + 2%)4
A = 1000 ⋅ 2% ⋅ 4
I = 1000 ⋅ 2% ⋅ 4
9
What is the right equation for simple interest with these values: P=$200, r=3.4%, t=6 months
I = 200⋅ (1 + 2%)6
I = 200⋅ 3.4% ⋅ 0.5
I = 200⋅ (1 + 2%)0.5
A = 200⋅ 3.4% ⋅ 6
10
If we have the same conditions (same time, rate and principal) which interest is better
Simple interest
Compounded interest
They are equal
None
11
Mia deposited $2,000 into an account. How much will Mia have after 7 months at a yearly simple interest rate of 3.2%?
$37.92
$2037.92
$45500
$455
12
What does the simple interest do?
The Principal grows each year
Applies the same interest each year
Applies a growing interest each year
The total amount stays the same
13
Starting money = $350.Interest rate = 2.5%TIme = 3 years.How much interest? (SIMPLE)
$87.5
$376.25
$262.50
$26.25
14
In the formula t stands for...
Time in months
Total amount after the time.
Total in $
Time in years
15
You have $3600 that you invest at 4% simple interest. How much would the balance be after 7 years?
4608
3600
5000
1008
16
Rate is...
The initial amount of money
The number of years that the interest is calculated
The percentage of interest to be applied every day
The total amount of money earned after the time
17
What is the right equation for simple interest with these values: P=$1000, r=2%, t=4 years
I=1000 ⋅ 2 ⋅ 4
I=1000 ⋅ (1 + 2%) ⋅ 4
I=1000 ⋅ 2% ⋅ 4
I=1000 ⋅ (1 + 2%)4
18
What does the compounded interest do?
Applies the same Principal each year
The total amount is same year after year.
The interest is constant
Applies a growing Principal each year

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