Simple and Compound Interest Test

When solving interest problems, sometimes you are given the time in months instead of years . Think about how we change the MONTHS into years for our formulas.

Convert 7 months to years for I=prt

When solving interest problems, it is important to change the % to a decimal

Change 4.8% to a decimal

Write the percent as a decimal.

4.3%

Alex earned $475 from mowing lawns last summer. He deposited this money in an account that pays an interest rate of 3.8% compounded annually. What will be his balance after 15 year?

• $827.52

• $831.10

• $745.75

• $270.75

Bryant borrowed $4,000 for 5 years at 6% simple interest rate. How much interest is earned?

• $5,200

• $1,000

• $1,200

• $2,800

Find the simple interest earned and the total amount in each case. The principle - $300.00, Rate - 5%, Time - 2 Years.

What is the Interest Earned and what is the Total Amount Earned?

• Interest $30.00 Total Amount $330.00

• Interest $31.00 Total Amount $331.00

• Interest $300.00 Total Amount $600.00

• Interest $30.00 Total Amount $270.00

Kadien invested $4,000 for 5 years at 7% simple interest rate. How much money will he have at the end of 5 years?

• $4,800

• $5,400

• $1,400

• none of these

McKinsey wants to buy a new Macbook. She borrows $1200 from a bank with 8% simple interest per year. How much will she have to pay back total in 2 years?

• $150

• $192

• $1350

• $1392

Anslee went to the mall and saw a new 85 in TV that she would have to take a loan out for $6500 to purchase. The bank said that she could get a simple interest rate of 8% and pay $2,600 back in interest. How many years did the bank tell Anslee she had to pay the money and interest back.

**YOU DO NOT NEED TO PUT YEARS IN YOUR ANSWER*

Janaya is buying a car and she has two options.

Option 1: A $15,000 car at 5% interest compounded annually for 5 years



Option 2: A $17,000 car at 3% interest compounded annually for 6 years

Which statement is true?

• Option 1 is better because the total price is about $1,154 cheaper than option 2

• option 2 is better because it is about $1,154 cheaper than option 1

• option 1 is better because it is about $1400 cheaper than option 2

• option 2 is better because it is about $1400 cheaper than option 1