U10 Financial Literacy

6A) Use what you know about simple and compound interest earning to fill in the blank:

Simple interest is calculated on the __________ amount only

• principal

• interest

• total value

• deposit

6B) Use what you know about simple and compound interest earning to fill in the blank:

Compound interest is calculated on the principal amount plus any previous __________ earned.

• interest

• principal

• total value

• deposit

7A) Adrienne and her brother John each inherit $7,000 that they use to open savings accounts with. Adrienne’s account earns 4.7% annual compound interest and John’s account earns 4.7% annual simple interest. Neither makes any additional deposits or withdrawals for 10 years. Who’s account will be worth more at the end of 10 years?

• Adrienne

• John

7B) Adrienne and her brother John each inherit $7,000 that they use to open savings accounts with. Adrienne’s account earns 4.7% annual compound interest and John’s account earns 4.7% annual simple interest. Neither makes any additional deposits or withdrawals for 10 years. How much more will Adrienne's account be worth?

8A) Mel decides to start depositing $75 each month into an interest earning savings account. She does not make any additional deposits or withdrawals. After 10 years, how much will Mel have contributed to the account?

8B) Mel decides to start depositing $75 each month into an interest earning savings account. She does not make any additional deposits or withdrawals.

According to her online calculations, the balance of Mel’s account will be $12,352.41. Is this more or less than what she contributed, and why?

10) Check all of the following that are true:

• The higher the interest rate, the more growth you will see.

• The lower the interest rate, the more growth you will see.

• The shorter the investment, the more growth you will see.

• The longer the investment, the more growth you will see.

11A) Jackie took out a $9,000 personal loan with a

4.5% interest rate that she will pay back in 3 years. She will make monthly payments of $267.72. Calculate the total cost of repayment.

11B) Jackie took out a $9,000 personal loan with a

4.5% interest rate that she will pay back in 3 years. She will make monthly payments of $267.72. Calculate the total interest Jackie will pay.

12A) Marvin is paying off a $6,800 loan that he took out for his new business. The loan has a 5.2% interest rate and Marvin will pay it off in 5 years by making monthly payments of $128.95. Find the total cost of repayment.