Exercise 6 · 14 min

How Interest Works

Time: 20 to 25 minutes · You'll need: a calculator with a power key (or a spreadsheet) · Builds on: Lesson 6

Warm-up

Check yourself

A savings account and a car loan both quote "6%". Which label should each use under US disclosure rules?

Check yourself

Your account pays 2% and inflation is 5%. Roughly what happens to your buying power over a year?

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