Financial Literacy Assessment Review

What is the compound interest formula?

• I = PRT

• A = P + I

• I = A - P

• A = P(1+r)^t

What is the simple interest formula?

• I = PRT

• A = P + I

• I = A - P

• A = P(1+r)^t

When comparing simple interest and compound interest, how do you find the difference between the balances?

• Addition

• Subtraction

• Multiplication

• Division

What does the "A" represent in the compound interest formula?

• Annual

• Amount

• Algebra

• Account

What does the "I " represent in the simple interest formula?

• Inverse

• Increase

• Interest

• Identity

After finding "A" using the compound interest formula, how do you find the amount of interest?

• I = PRT

• A = P + I

• I = A - P

• A = P(1+r)^t

After finding "I " using the simple interest formula, how do you calculate the total account balance?

• I = PRT

• A = P + I

• I = A - P

• A = P(1+r)^t

Caiden and Julia each deposit $800 into separate accounts. Caiden’s account earns 6% simple interest every year. Julia’s account earns 6% interest compounded annually. No additional money is deposited or withdrawn from either of the accounts. Which statement is true about the balances of their account at the end of 12.5 years?

• Caiden’s account will have $1,057.35 more than Julia’s account.

• Caiden’s account will have $257.35 more than Julia’s account.

• Julia’s account will have $1,057.35 more than Caiden’s account.

• Julia’s account will have $257.35 more than Caiden’s account.

A $2,500 bond earns 4.5% simple annual interest. How much is the bond worth after 2 years?

• $225

• $2725

• $230.06

• $2730.06

Devon opened a savings account with a deposit of $2,750. The balance will earn 6.5% interest compounded annually. He does not deposit any additional money or make any withdrawals from this account. What will his account balance be after 8 years?

• $1430

• $4180

• $1801.24

• $4551.24