# Acc. Math Vocab Ch. 5

### 11 terms by eserafen

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### Percent

A ratio that compares a number to 100

### Percent of change

The percent a quantity increases or decreases from its original amount

### Principal

The original amount deposited or borrowed

### Interest Rate

The rate, usually expressed as a percent, used to calculate interest

### Interest

The amount of money paid for the use of borrowed money

### Balance

The principal plus the interest earned

### Simple Interest

The interest calculated only on the principal

### Formula for Simple Interest

I = prt (Interest - principal • rate • time)

### Compound Interest

Interest that is paid on both the principal and also on any interest from past years.

### Formula for Compound Interest

B = P(1 + r)n (Balance = Principal (1 + rate) ^ time

### What is the difference between Compound and Simple Interest?

Simple interest is only calculated on the original balance, but compound interest is calculated on the principal plus the annual balance

Example: