April 19 Compound Interest

What does the n stand for in this formula?

• Initial amount

• Final amount

• Rate

• Time

• The number of times compounded per year

What does the r stand for in this formula?

• Initial amount

• Final amount

• Rate

• Time

• The number of times compounded per year

What does the P stand for in this formula?

• Initial amount

• Final amount

• Rate

• Time

• The number of times compounded per year

What is the correct definition of interest?

• money paid to you by a bank for the money you have in a bank account

• put into a bank account

• to borrow something

Emily's parents put $1,500 in her bank account for college tuition. At an interest rate of 8.25% compounded semi-annually, what will be the balance after 3 years?

• $2,273.50

• $1,514.08

• $2,040.23

• $1,911.70

Bruno was given $2000 when he turned 3 years old.  His parents invested it at a 2% interest rate compounded annually.  No deposits or withdrawls were made.  Which expression can be used to determine how much money Bruno had in the account when he turned 16? 

• 2000(1+0.02)¹³
• 2000(1-0.02)¹³
• 2000(1+0.02)¹⁶
• 2000(1-0.02)¹⁶

Chelsea put $7500 into an account paying 5% compounded continuously. She now has $10,643.01. How long has the money been in the account?

• 7 years

• 6 years

• 5 years

• 4 years

Monthly means how many times a year?

• 4 
• 12
• 52
• 365

Shawn is buying a new Jet Ski for $12,500. He is considering 2 credit options. Option A offers a 6 year loan with 8.5% interest compounded quarterly, while Option B offers a 5 year loan with10% interest compounded annually.Which option is better and how much will he save?

• A) A; $495.21 raise money for charity
• B) A; $573.83 get attention
• C) B; $495.21 get on the news
• D) B; $573.83 do something crazy

Given an investment of $1,500:
Which investment would have a larger balance after 5 years?
Option 1 - 4% compounded monthly
Option 2 - 3.9% compounded daily. 

• Option 1
• Option 2