2-4 Explore Compound Interest

Multiple Choice

Which of the following is NOT a type of compounding mentioned in the key terms?

• Annual compounding

• Monthly compounding

• Quarterly compounding

• Daily compounding

Multiple Choice

Which of the following statements about compound interest is correct?

• Interest can be compounded every minute.

• Interest can only be compounded annually.

• Interest cannot be compounded more than once a year.

• Interest can only be compounded monthly.

Open Ended

Maria deposits $1,000 in a savings account that pays 2% interest, compounded semi-annually. What is her balance after 1 year?

Multiple Select

Select all scenarios where the interest is compounded more than once a year.

• Compounded annually

• Compounded semi-annually

• Compounded quarterly

• Compounded every hour

Open Ended

Explain the difference between interest compounded annually, semi-annually, and quarterly. Use the examples provided to support your explanation.

Open Ended

How much interest does $1,000 earn in one day at an interest rate of 2%, compounded daily? What is the balance after a day?

Open Ended

Jennifer has a bank account that compounds interest daily at a rate of 1.2%. On July 11, the principal is $1,234.98. She withdraws $200 for a car repair. She deposits a $34 check from her health insurance company. On July 12, her $345.77 paycheck is directly deposited to her account. What is her balance at the end of the day on July 12?

Multiple Choice

Which of the following factors would NOT affect the final balance in Joelle's savings account after her first deposit and interest are applied?

• The amount of her first paycheck

• The interest rate of the account

• The day of the week she made the deposit

• The frequency of compounding

Multiple Choice

Which of the following best describes the concept of compound interest?

• Earning interest on both the initial principal and the accumulated interest.

• Earning interest only on the initial principal.

• Paying interest on a loan only once a year.

• Receiving interest payments in cash each month.