Tuason P - Compound Interest

Multiple Choice

What is the benefit of compound interest for investors?

• It only applies to the principal amount

• It allows earning interest on previously earned interest

• It decreases the total investment value

• It is only applicable for short-term investments

Multiple Choice

What is the definition of the Nominal Interest Rate?

• The stated annual interest rate on which the compound interest calculation is based.

• The rate of interest earned in one conversion period.

• The equivalent annually compounded rate.

• The time interval between succeeding interest calculations.

Multiple Choice

Bruno was given $2000 when he turned 3 years old.  His parents invested it at a 2% interest rate compounded annually.  No deposits or withdrawals were made.  Which expression can be used to determine how much money Bruno had in the account when he turned 16? 

• 2000(1+0.02)¹³
• 2000(1-0.02)¹³
• 2000(1+0.02)¹⁶
• 2000(1-0.02)¹⁶

Multiple Choice

Jimmy invested $200 in a retirement account that had a rate of 20% that compounds annually.  If Jimmy leaves his money there for 40 years, how much money will be in his account rounded to the nearest dollar?

• $29395
• $293954.31
• $293954

Fill in the Blanks

Mr. LaTour invests $20,000 in an account that earns 10% interest that compounds annually.

Mrs. Murphy invested $20,000 in an account that earns 10% interest that compounds monthly.

How much more money will Mrs. Murphy have at the end of 20 years.

round each answer to the nearest dollar and subtract

Write your answer without $ or ,

Multiple Choice

Jessica and Michael open an online savings account that has 3.6% annual interest rate, compounded monthly. If they deposit $1,200 every month, how much will be in the account after 10 years?

• 179,879.20

• $180,950.70

• $173,022.87

• $172,035.65

Multiple Choice

You use the annuity formula when you

• Make multiple regular payments

• Make one big deposit

Multiple Choice

What is the formula for the accumulated value of an ordinary annuity?

• S = R + R(1 + i) + R(1 + i)^2 + ... + R(1 + i)^(n-2) + R(1 + i)^(n-1)

• S = R(1 + i)^n - 1

• S = R(1 + i)^(n-1)

• S = R(1 + i)^(n) - 1

Multiple Choice

What is the formula for the present value of an ordinary annuity?

• A = R(1 + i)^{-1} + R(1 + i)^{-2} + ... + R(1 + i)^{-(n-1)} + R(1 + i)^{-n}

• A = R(1 + i)^{n}

• A = R(1 - (1 + i)^{-n})/i

• A = R(1 + i)^{n} - R

Multiple Choice

How much money will be in the fund after 4 years if Michele makes deposits of Php 30,000 at the end of every 6 months in a bank that gives 4% interest compounded semi-annually?

• Php 200,000

• Php 257,489.07

• Php 300,000

• Php 150,000

Multiple Choice

What is the monthly allowance that the father will give to his daughter based on the investment?

• Php 10,000

• Php 14,334.78

• Php 15,000

• Php 12,500

Fill in the Blanks

Use the compound interest formula to determine the final value of the given amount:

$350 at 25% compounded quarterly for 5 years.

$A=P\left(1+\frac{r}{n}\right)^{nt}$

Multiple Choice

If I borrow $500 from a payday lender, and the interest is compounded monthly at an annual rate of 24%, how much money would I owe after one year? (Please use reasoning to eliminate impossible and unlikely answers)

• 12%

• $520.00

• $634.12

• 48%

Multiple Choice

What does the Effective Interest Rate (r) refer to?

• The rate of interest compounded multiple times

• The rate of interest compounded only once per time period

• The rate of interest that is not compounded

• The rate of interest that decreases over time

Multiple Choice

Determine the effective rate of interest for each of the following nominal interest rate j compounded m times a year.

• 2%

• 3%

• 1.5%

• 5%

Multiple Choice

What is the significance of mathematics in the modern world?

• It is only used in science

• It has no real-world applications

• It is essential for various fields

• It is only for academic purposes

Multiple Choice

You have $50,000 to invest and you want $75,000. How much longer would it take if you use an account that gets 3.5% compounded daily, when compared to an account that gets 4.5% compounded continuously? (only round final answer)

• 11.6 years

• 9 years

• 2.6 years

• 5.9 years

Multiple Choice

Kennedy won $3,000 from a radio contest. If she puts this money in a bank account that earns 2.9% interest compounded quarterly, how much total will she earn in 10 years?

• $4915.59
• $3933.28
• $2979.81
• $4005.09

Fill in the Blanks

How much would an account be worth after 25 years if a principal of $5000 is deposited into an account with an interest rate of 3.75% compounded monthly?

Fill in the Blanks

If I invest $60,000 in an account that has an interest rate of 4% that compounds daily, how much money will I have in the account at the end of 10 years?

HINT: 365 days in a year

round to the nearest dollar

Write your answer without $ or ,

Multiple Choice

What does the phrase 'The End' signify in a story or presentation?

• A conclusion

• An introduction

• A conflict

• A climax

Poll

How confident do you feel about this topic now?

• Very confident
• Somewhat confident
• Not confident

Poll

How confident do you feel about this topic now?

• Very confident
• Somewhat confident
• Not confident