Compound Interest Quiz

True or False: Compound interest is only applicable to financial investments.

• True

• Only to savings accounts

• Only to real estate investments

• False

What is the main advantage of compound interest compared to simple interest?

• Compound interest earns interest on only the initial principal.

• Compound interest earns interest on both the initial principal and the accumulated interest over time.

• Compound interest does not earn any interest over time.

• Compound interest is calculated using a simpler formula than simple interest.

What is the formula for calculating compound interest?

If you invest $1000 at an annual interest rate of 5% compounded quarterly, about how much will you have after 3 years?

• $1160.00

• $1030.00

• $1200.00

• $1125.00

If you invest $5000 at an annual interest rate of 8% compounded semi-annually, how much will you have after 5 years?

• $7,122.44

• $6,000

• $7,000

• $6,500

Mark took a loan out for $25,690 to purchase a truck. At an interest rate of 5.2% compounded monthly, how much total will he have paid after 5 years?

• $33,299.42      

• $33,672.68  

• $34,157.04        

• $34,710.88  

The Henley's took out a loan for $195,000 to purchase a home. At a 4.3% interest rate compounded annually,how much interest will they  have paid after 30 years?

• $412,749.79      

• $429,305.61      

• $471,259.24

• $494,546.99