Compound and Simple Interest

Compound and Simple Interest

Formula for Simple Interset

Compound Interest Formula

• "n" is the new piece

• Sometimes the question will tell you how many times. Other Times, you have to understand the terms

• Annually = 1 time

• Semi-annually = 2 times

• Quarterly = 4 times

• Monthly = 12 times

Multiple Choice

A bank is offering 2.5% simple interest on a savings account. If you deposit $5,000, how much interest will you earn in three years?

• $5375

• $375

• $37500

• $42500

Multiple Choice

A bank is offering 7% annual compound interest on a savings account. If you deposit $1,500, how much interest will you earn in three years?

• $1837.56

• $337.56

• $30000

• $31500

Multiple Choice

Sarah borrowed $18,000 for 4 years at an annual simple interest rate of 7%. What is the total amount she will repay for the car loan?

• $50,4000

• $5,040

• $23,040

• $18,000

Multiple Choice

Ricco deposits $500 in an account that earns 2.5% interest compounded annually for 3 years. Wally deposits $500 in an account that earns 5.1% interest compounded annually for 2 years. Who will earn the greatest amount of interest?

• Ricco will earn $13.85 more than Wally

• Wally will earn $13.85 more than Ricco

Multiple Choice

Both Ryan and Tom open their accounts with an initial deposit of $3500. They are both planning a six-year investment and will withdraw their money after 6 years. Who will have a greater balance in six years? How much more will that person have?

• Tom will have $83.77 more than Ryan.

• Ryan will have $83.77 more than Tom.

• Ryan will have $3416.23 more than Tom.

• Tom will have $3416.23 more than Ryan.