Simple and Compound Interest

Simple and Compound Interest

​MTHS101 - Nature of Financial Management

by Elo Cheng

Multiple Choice

The money you borrow or invest is called __________?

• Simple Interest

• Rate

• Principal

• Time

Multiple Choice

The extra money created on the money borrowed is called________?

• Amount

• Rate

• Interest

• Principal

Multiple Choice

Emilio borrows $1200 from a bank with 8% simple interest per year.  How much will he have to pay back total in 2 years?

• $150
• $192
• $1350
• $1392

Multiple Choice

Jenna borrowed $5,000 for 3 years and had to pay $1,350 simple interest at the end of that time. What rate of interest did she pay?

• 6%
• 6%
• 8%
• 9%

Multiple Choice

Anna invested $2,500 at an annual rate of 5%.  How long will it take until Anna earns $1,125 in interest?

• 5 years
• 8 years
• 10 years
• 9 years

Multiple Choice

What does the n stand for in this formula?

• Initial amount

• Final amount

• Rate

• Time

• The number of times compounded per year

Multiple Choice

Karla invested $1,000 in savings bonds. If the bonds earn 6.75% interest compounded semi-annually.

Which exponential equation can be used to find how much money Karla will earn in 15 years?

Multiple Choice

The period of 9 months is taken as how many quarters?

• 3
• 2
• 4
• 9⁄4

Multiple Choice

Daniel invests $360 in a bank account that is compounded annually for 8 years with an interest rate of 5.5%. What will be the total amount in the account after the 8 years is over?

• $625.88

• $950.12

• $315.45

• $552.49

Multiple Choice

If $1,000 is invested at 16% interest, compounded annually, for five years, what is the ending balance?

• $1,225,54

• $2,100.34

• $22,255.40

• $225.54