Compound Interest

Caiden 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

• $839.45

• $846.80

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The compound interest formula is:

A = P(1 + r)^t

What does the A represent?

• The amount of interest earned.

• The amount of time that has passed.

• The total amount of money after a certain amount of time.

• The amount required to invest.

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The compound interest formula is:

A = P(1 + r)^t

What does the P represent?

• The amount of interest earned.

• The amount of time that has passed.

• The total amount of money after a certain amount of time.

• The amount required to invest.

The compound interest formula is:

A = P(1 + r)^t

What does the T represent?

• The amount of interest earned.

• The amount of time that has passed in years

• The total amount of money after a certain amount of time.

• The amount required to invest.

Jay'den earned $475 from mowing lawns last summer. He deposited this money in an account that pays an interest rate of 3.8% compounded annually. Jay'den wants to know his balance after 15 years?

What does 3.8% represent?

• Principal or initial value, P

• Rate of interest, r

• Number of times interest is compounded, n

• Time, t

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CCSS.HSA.CED.A.1

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1) Gabby invested $100 into a savings account that earned simple interest at a rate of 1.5%.  She plans to keep the money in the account for the next ten years.  How much would she have in the account at the end of ten years?

• $15

• $115       

• $116.05

• $1,500

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2) Jacob invested $400 into a savings account that earned simple interest at a rate of 1.25%.  He plans to keep it in the account for the next 10 years.  How much interest would he gain in the account after 10 years?

• $50

• $450       

• $500       

• $5,000

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3)  Jose invests $200 into an account at a rate 2%.  He plans on keeping the account open for 15 years.  If it is a compound interest account, about how much money will he have in the account after 15 years?

• $60         

• $70

• $260       

• $270

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CCSS.HSA.CED.A.1

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4) Rosa invests her tax return check into an account with a compounded interest rate of 1.75 %. She plans on keeping the account open for 12 years. If she has $1600.87 in her account at the end of 12 years, approximately how much was her initial investment?

• $1,300

• $1,970

• $7,690

• $11,000

Heather

invested $8,000 in a 4-year Certificate of Deposit (CD) that pays 4.1% interest

compounded annually. What is the value of the CD at the end

of the 4 years?

• $9,394.92

• $9,312.00

• $1394.00

• $1312.00

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