3.1 Quiz: Interest and Compounding

Jimmy invests $4000 in an account that pays 5% annual interest, compounded semiannually. What is his balance, to the nearest cent, at the end of 10 years?

• $6,554.47

• $6,727.50

• $6,500.00

• $6,814.45

On Olga’s 16th birthday, her uncle invested $2000 in an account that was locked into a 4.75% interest rate, compounded monthly. How much will Olga have in the account when she turns 18? Round to the nearest cent.

• $2152.02

• $2215.89

• $2198.91

• $2271.78

Samantha deposits $1,500 into the Park Street Bank. The account pays 4.12% annual interest, compounded daily. To the nearest cent, how much is in the account at the end of three non leap years?

• $1,698.61

• $1,709.21

• $1,697.33

• $1,720.18

Joanne deposits $4,300 into a one-year CD at a rate of 4.3%, compounded daily. What is her ending balance after the year?

• $4,478.51

• $4,500.00

• $4,488.92

• $4,485.23

Mike deposits $5,000 in a three-year CD account that yields 3.5% interest, compounded weekly. What is his ending balance at the end of three years?

• $5,553.36

• $5,645.32

• $5,892.47

• $6,050.22

Rob deposits $1,000 in a savings account at New Your State Bank that pays 4.4% interest, compounded monthly. What is the APY for this account to the nearest hundredth of a percent?

• 4.4%

• 4.5%

• 4.6%

• 4.7%

How much more does $1,000 earn in eight years, compounded daily at 5%, than $1,000 over eight years at 5%, compounded semiannually?

• $7.27

• $6.58

• $7.51

• $6.45

If $3,000 is invested at an interest rate of 4.8%, compounded hourly for two years, what is the ending balance?

• $3,296.32

• $3,302.27

• $3,250.00

• $3,310.24

Make and Julie receive $20,000 in gifts from friends and relatives for their wedding. They deposit the money into an account that pays 4.75% interest, compounded daily.

a. Will their money double in fourteen years?

b. Will their money double in fifteen years?

• Only in fourteen years

• Only in fifteen years

• In both fourteen and fifteen years

• In neither fourteen nor fifteen years

Island bank is advertising special 6.55% APR for CDs. Manny takes out a one year CD for $40,000. The interest is compounded daily. Find the annual percentage yield for Manny’s account to the nearest hundredth of a percent.

• 6.77%

• 6.55%

• 7.00%

• 6.75%