Money Calculations Flashcards
By Sam Harvey
1
Q
What is an interest rate?
A
An interest rate is the proportion of a loan that is charged to the borrower of that loan.
2
Q
What is a simple Interest?
A
Simple intrerest is the amount of interest fixed over a time.
3
Q
What is compound interest?
A
Compound interest is when the interest earned over time will continue to increase as long as no money is withdrawn from the account.
4
Q
With Simple intrest if you deposit £250 in a bank account which is paying 3% interest per year. How much interest would you have over 3 years?
A
3% of £250= £7.50
£7.50x3=£22.50
5
Q
With compound interest if you deposit £250 in a bank account which is paying 3% interest per year. How much interest would you have over 3 years?
A
Year 1/£250x0.03=£7.50 Year 2/(£250+£7.50)x0.03=£7.725 Year 3/(£250+£7.725)x0.03=£7.73175 Then you plus £7.50+£7.725+£7.73175=£22.95675 Round it to £23
