Sure, let's match each definition or formula to the correct interest type.
1. Simple Interest:
- Formula: [tex]\( \text{Total Interest} = \text{Principal} \times \text{APR (as a decimal)} \times \text{Term of Loan} \)[/tex]
- Description: Interest calculated once on the starting principal.
2. Compound Interest:
- Formula: [tex]\( A = P \left(1+\frac{r}{n}\right)^{ nt } \)[/tex]
- Description: Interest calculated multiple times over the course of a loan, where:
- [tex]\(A\)[/tex] is the amount of money accumulated after n years, including interest.
- [tex]\(P\)[/tex] is the principal amount (initial amount of money).
- [tex]\(r\)[/tex] is the annual interest rate (as a decimal).
- [tex]\(n\)[/tex] is the number of times that interest is compounded per year.
- [tex]\(t\)[/tex] is the time the money is invested for in years.
So the table should look like this:
| Interest Type | Definition or Formula |
|-------------------------|-----------------------------------------------------------------|
| Simple Interest | Total Interest = Principal × APR (as a decimal) × Term of Loan |
| Simple Interest | Interest calculated once on the starting principal |
| Compound Interest | Interest calculated multiple times over the course of a loan |
| Compound Interest | [tex]\(A = P \left(1+\frac{r}{n}\right)^{ nt }\)[/tex] |
