Compound Interest Quiz Review

The compound interest formula is FV = PV(1+i/n)^nt. What does n represent?

• interest rate

• number of years the money is in the account

• number of times the interest is compounded per year

• initial investment

You have saved $800 and decide to invest your money into an account that pays 3% annual interest. How much will you have after 4 years?

• $874.18

• $900.41

• $900.40

• $896

Bruno was given $2000 when he turned 3 years old. His parents invested this money into a savings account that pays 2% interest compounded annually. Which of the following equations shows how much money Bruno will have on his 16th birthday?

• 2000(1+.02)¹³

• 2000(1+.02)¹⁶

• 2000(1-.02)¹³

• 2000(1-.02)¹⁶

Find the Future Value for the following:

PV: $999

interest rate: 5.45% compounded quarterly

time: 19 years

• $2794.10

• $2774.98

• $2738.11

• $2807.11

How much money does Sam need to invest in order to have $4500 after 5 years in an account paying 4% interest compounded quarterly?

• $3463.04

• $3687.95

• $3366.58

• $3903.18

How much money does Olivia have in her savings account if 8 years ago she invested $7400 in an account paying 9.5% interest compounded quarterly?

• $15415.94

• $15927.56

• $15683.28

• $16109.05

Bob needs $1200. If he deposits $950 into an account that pays 3% interest compounded quarterly, how long will it take him to reach this amount?

• 31 years

• 32 years

• 7 years

• 8 years

Sara wants to have $5000 in her account when she retires in 25 years. Which account should Sara invest her money in?

• a savings account that earns 3% interest compounded monthly

• a checking account that earns 3.5% interest compounded annually

• a money market account that earns 3.5% interest compounded weekly