Simple and Compound Interest

In the simple interest formula I=prt, what does t represent?

• time in months

• interest rate

• time in years

• principal amount

In the simple interest formula, P represents Principal, Principal is the...

• time

• interest earned

• interest rate

• initial amount of money borrowed/deposited

Arber borrows $1,200 from a bank with 8% simple interest per year. How much willl he have to pay back total in 2 years?

• $150

• $192

• $1350

• $1392

Quincy invested $200 in a retirement account that had a rate of 20% that compounds annually. If Quincy puts his money in when he is 24 and takes it out when he is 64, how much money will be in his account rounded to the nearest dollar?

• $293,954

• $1,800

• $1,600

• $2,560

Danielle earned $475 from mowing lawns last summer. She invested the money in an account that pays an interest rate of 3.8% compounded annually. What will be her balance after 15 years?

• $827.52

• $745.75

• $831.10

• $270.75

Katie took a car loan of $35,000 at a simple interest rate of 3.8% over 4 years. Calculate the total simple interest she will have to pay.

• $5,575

• $40,320

• $5,320

• $40,631

Leila deposited $500 in an account that earns 6% simple interest. Shelly deposited $500 in an account that earned 6% interest compounded annually. After 4 years, which statement is true about the two investments?

• Shelly will have $131.24 more in her account

• They will have the same amount in their accounts

• Shelly will have $11.24 more in her account

• Leila will have $11.24 more in her account

Gabe deposited $800 in an account that earns 6% interest compounded annually. Christian deposits $800 in an account that earns 6% simple interest. How much will they both have at the end of 10 years if no money is touched?

• Gabe: $1432.68; Christian $1280

• Gabe $1444.89 ;Christian $1320

• Gabe $1444.89 ;Christian$1280

• Gabe $1432.68 ;Christian $480

In some investment accounts, interest is computed on interest that has been earned in previous years in addition to the principal amount. What is this called?

• Simple Interest

• Compound Interest

• Double Interest

• Not enough information

When calculating interest how do you write the percent?

• a fraction

• a rounded number

• a whole number

• a decimal