Simple and Compound Interest

Sara is going to deposit $2,500 into two different accounts.

• Account 1 offers 3.5% simple interest
• Account 2 offers 3.25% compounded annually

What will the sum of the balances be in dollars and cents in Sara's accounts?

• $5,867.06

• $3,371.03

• $843.75

• $5,902.74

Michael invests $3,300 into an account that gains 4.25% interest compounded annually. At the end of 3 years, how much interest will the account have earned?

• $3,738.89

• $438.89

• $3,720.75

• $420.75

Jackson is borrowing $25,000 to buy a new car. He can choose between 2 different banks.

Bank A is offering 3.25% simple interest for 4 years.

Bank B is offering 3.5% simple interest for 42 months.

Which bank offers the lower interest? What is the difference between them?

• Bank A because it is less by $187.50

• Bank A because it is more by $33,500

• Bank B because it is less by $187.50

• Bank B because it is more by $33,500

You borrowed $59,000 for 2 years at 11% which was compounded annually. How much interest will you pay back?

• $71,980

• $12,980

• $13,693.90

• $72,693.90

Your 6 year investment of $40,000 at 14% interest compounded annually is worth how much now?

• $47,798.90
• $87,798.90
• $127,798
• $7,798

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You take out a loan for $175,000. Which option will cost you less?

A) Simple Interest rate of 4.17% over 15 years

B) Compound Interest rate of 3.5% over 15 years

• Option A

• Option B

• they are both equal

You deposit $2,500 in a savings account.

What is the difference in the amount of interest that will be paid in each situation?

Option A) Interest rate of 8.25% simple interest for 2 years

Option B) Interest rate of 6.5% compounded annually for 2 years

• $769.40

• $335.56

• $76.94

• $68.52

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Carly deposited $800 in an account that earns 6% compounded annually.

Lara deposited $800 in an account that earns 6% simple interest.

How much more will Carly have at the end of 10 years?

• Carly will have $152.68 more than Lara

• Carly will have $164.89 more than Lara

• Carly will have $124.89 more than Lara

• Carly will have $112.68 more than Lara

Steve deposited

$5,000 in a savings account that pays 4% interest compounded annually. Which

equation could be used to find the value of the account after 3 years?

• A = 5,000(1 + 4)³

• A = 5,000(1 + 0.04)³

• A = 5,000(1 + 0.4) x 3

• A = 5,000(0.04)³

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Jenny invested $5,000 each into two accounts.

• Account I pays 4.25% simple interest
• Account II pays 3.75% interest compounded annually.

How much money will be in both accounts at the end of 48 months?

• $6,643.25

• $11,643.25

• $1,600

• $11,600