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11 terms

Acc. Math Vocab Ch. 5

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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