Simple and Compound Interest (Grade 12 NSC Matric Business Studies): Flashcards
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Interest (investment context)
Interest (investment context)
Return earned for allowing others to use your funds
Capital gain
Capital gain
Increase in investment value over time vs original price
Simple interest definition
Simple interest definition
Interest calculated only on original principal amount
Compound interest definition
Compound interest definition
Interest calculated on principal + accumulated interest
Simple interest formula
Simple interest formula
P × r × t
Compound interest formula
Compound interest formula
P × (1 + r)^n - P
Key difference: simple vs compound interest
Key difference: simple vs compound interest
Compound earns interest on interest; simple doesn't
Which gives higher returns: simple or compound?
Which gives higher returns: simple or compound?
Compound interest (over same period and rate)
Convert 12% to decimal for interest formula
Convert 12% to decimal for interest formula
0.12 (divide by 100)
Why compound interest grows faster
Why compound interest grows faster
Each calculation uses larger base (principal + interest)