Unit 9 Review

Unit 9 Review

Simple Interest

• I=PRT

Multiple Choice

After calculating simple interest, how do you calculate total account balance?

• Account Balance = Interest x Rate

• Account Balance = Principal - Interest

• Account Balance = Principal + Interest

• Account Balance = Interest + Rate

Multiple Choice

Five years after opening his savings account, Hank had $9,205 in the account which earns annual simple interest. If Hank started with $7,000 in his account and did not make any additional deposits or withdrawals, what was the approximate annual interest rate on the savings account?

• 6.3%

• 15.2%

• 26.3%

• 4%

Multiple Choice

Francis deposited $18,300 in a savings account that earns 3.2% simple interest. Frankie has not made any deposites or withdrawals since she opened the account. Approximately how many years have passed since Frankie opened the account if her latest balance is $21,228?

• 4 years

• 5 years

• 0.8 years

• 26 years

Multiple Choice

Nelly's mother is borrowing $32,000 to buy a car from the dealership. She contacted several banks, and she is comparing two different options.

-Company 1 offers an interest rate of 3.75%

-Company 2 offers an interest rate of 6.9%

Both loan options involve simple interest and must be repaid in exactly 4 years. How much more will Nelly's mother pay in interest if she chooses to borrow the money from Company 2?

• $4,800

• $8,832

• 954

• $4,032

Fill in the Blanks

Gigi invests $750 in a savings account that earns 5% simple interest annually. If she does not make any additional deposits or withdrawals, how much money will be in the savings account after 6 years?

(Fill in the blank, make sure there are no extra spaces or dollar signs)

Compound Interest

•  $A=P(1+r)^t$  

• Compound Interest formula calculates total account balance

Multiple Choice

Benny is considering various savings options. At Bank 1, she can invest $2,000 in a CD that earns compound interest at an annual rate of 3.6%. At Bank 2, she can invest $2,000 in a savings account that pays 3% simple interest upon withdrawal. How much more money would Benny earn in 4 years with the CD at Bank 1 than with the savings account at Bank 2.

• $240

• $303.93

• $63.93

• $21.28

Multiple Choice

Alex is borrowing $22,000 to buy a new motorcycle. If he borrows the money at 6.25% interest compounded annually for 3 years, how much interest will he pay on his motorcycle?

• $4,388.18

• $26,388.20

• $4,125

• $26,125

Simple vs. Compound Interest

• Make a table & write down all your variables from the word problem.

• Figure out if you are comparing total account balance OR interest earned.

Multiple Choice

Jerry is going to deposit $870 in an account that earns 7.7% interest compounded annually. His wife Bailey will deposit $925 in an account that earns 8.4% simple interest each year. They deposit the money on the same day and make no additional deposits or withdrawals for the accounts. Which statement is true concerning Jerry's and Bailey's account balances after 4 years?

• Jerry's account will have about $65.27 less than Bailey's account.

• Bailey's account will have about $65.27 less than Jerry's account.

• Jerry's account will have about $42.84 less than Bailey's account.

• Baileys account will have about $42.84 less than Jerry's account.

Cost of College

• 1 year = 2 Semesters

• 1 year = 12 months

• Scholarships, Grants, & Family Contributions is free money

• Subtract family contribution percentages from 100% to get the percentage student is responsible for.

Multiple Choice

Whitney has a list of the estimated costs for each semester to attend a four-year university. What is the total estimated cost to attend college for four years?

• $15,564

• $62,256

• $7,782

• $31,128

Multiple Choice

The cost of tuition at the college Sabrina wants to attend is $10,400 per year. Sabrina's family will pay 60% of the tuition cost each year. Sabrina has two years to save enough money to attend her first year of college. What is the minimum amount that she should save each month in order to have enough money to attend her first year of college?

• $260

• $346.67

• $4,160

• $173.33

Multiple Choice

Wendy is planning to attend a private university after she graduates from high school in 4 years. She is devising a plan to save money each month to help with the expenses of attending the university. The cost of attending the private university for one year is $24,700. Her family promised to contribute $12,300 each year she is in school. Which plan shows the minimum amount of money Wendy must contribute to her savings to have enough money to pay for her first year of tuition?

• Save $258.33 per month for the next 4 years

• Save $1,033.33 per month for the next 4 years

• Save $514.58 per month for the next 4 years

• Save $356.25 per month for the next 4 years