Compound Interest

________ interest is the interest paid on both principal and existing interest. It is usually termed "interest over the interest."

A = P(1+r/n)^nt

This formula is used when solving for the compound______.

(Use capital letters only)

Help Liza choose the correct formula for compound interest.

• P(1+r/n)^nt − P

• P(1-r/n)^nt + P

• P(1+r/n)^nt

• P(1+r/n)^nt

TRUE OR FALSE

Annually = 12

Semi-Annually = 2

Quarterly = 4

Monthly = 1

• TRUE

• FALSE

Mae states that compound interest over a period of time is always greater than or equal to simple interest. Is her statement true?

• Yes

• No

A teacher wants to invest P30,000 into an account that compounds annually. The interest rate at this bank is 1.8%. How much money will be in the account after 6 years?

• P43,389.35

• P35,389.35

• P33,389.35

• P37,389.35

If a business owner invests P10,000 at an interest rate of 4% compounded semi-annually, how much will the investment be worth after 10 years?

• P14,000.00

• P14,802.00

• P14,859.47

• P14,934.35

An investment earns 3% each year and is compounded monthly. Calculate the interest after 6 years from an initial investment of P5,000.

• P1,022.74

• P994.64

• P984.74

• P972.64

Jodi wants to have P2,000,000 for retirement in 45 years. She invests in a mutual fund and pays 8.5% each year, compounded quarterly. How much should she deposit into the mutual fund initially?

• P47,421.08

• P35,421.08

• P43,421.08

• P45,421.08

Calculate the interest rate for an account that started with P12,000 and now has P25,000, compounded monthly for 1 year.

• 77.91%

• 76.51%

• 75.69%

• 74.33%