Consumer Math Unit 5 Study Guide

What is the difference between simple interest and compound interest?

• Compound interest requires a banker.

• Simple interest gains more money faster.

• Simple interest gains interest on interest were compound interest only gains it on the principal.

• Compound interest gains interest on interest were simple interest only gains it on the principal.

What is the difference between an ordinary annuity and an annuity due?

• Ordinary annuity is like Clark Kent and an annuity due is like Superman.

• Ordinary due is a regular due date and an annuity due is a bill.

• Ordinary annuity is paid at the end of an interest period were Annuity due is paid at the beginning.

• Annuity due is paid at the end of an interest period were ordinary annuity is paid at the beginning.

Jerry has a savings account that has an annual interest rate of 2%. Jerry has $7200 in his account what will he earn in interest after 1 year?

• $144

• $411

• $1,440

• $4,140

Alex has a savings account that has an annual interest rate of 5%. He has $7200 in his account what will he earn in interest after 6 months?

• $360

• $630

• $180

• $18

You earned $250 in simple interest in 6 months at an annual interest rate of 5%. How much money did you invest?

• $11,000

• $14,000

• $10,000

• $5,000

Change 6.75% to a decimal.

• 67.5
• .675
• 675
• .0675

Semi-Annually means how many times a year?

• 4 
• 2
• 1
• 6

You invested $2,000 in a savings account at 4% interest compounded annually for 3 years. How much interest did you earn in 3 years?

• $2,249.73

• $249.73

• $5488

• $3488

Your 6-year investment of $20,000 at 12% interest compounded annually is worth how much now?

• $39,476.45

• $19,476.45

• $45,000

• $10

Brenda saves $500 at the end of every quarter in an ordinary annuity earning 4.5% interest compounded quarterly. How much will Brenda have saved in 10 years?

• $2,406.18

• $2,408.18

• $25744.77

• $25745.77