Acc. Math Vocab Ch. 5
A ratio that compares a number to 100
Percent of change
The percent a quantity increases or decreases from its original amount
The original amount deposited or borrowed
The rate, usually expressed as a percent, used to calculate interest
The amount of money paid for the use of borrowed money
The principal plus the interest earned
The interest calculated only on the principal
Formula for Simple Interest
I = prt (Interest - principal • rate • time)
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