Simple and Compound Interest Quiz

Mary deposited $1,000 in a bank account that pays 4% simple interest per year. How much interest will she earn after 3 years?

• $30

• $120

• $40

• $90

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CCSS.HSA.SSE.A.1

CCSS.HSA.CED.A.1

CCSS.HSA.REI.B.3

Alex borrowed $500 at a simple interest rate of 6% per year. After 2 years, how much will he owe in total?

• $580

• $560

• $540

• $520

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CCSS.HSA.SSE.A.1

CCSS.HSA.CED.A.1

CCSS.HSA.REI.B.3

Sarah invested $2,000 in a savings account with an annual compound interest rate of 5%. How much will her investment be worth after 4 years?

• $2,420.25

• $2,100.25

• $2,200.50

• $2,320.25

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CCSS.HSA.SSE.A.1

CCSS.HSF.LE.A.1

CCSS.HSF.LE.A.2

CCSS.HSA.CED.A.1

CCSS.HSF.BF.A.1

John borrowed $1,200 at an annual compound interest rate of 8%. If interest is compounded quarterly, how much will he owe after 2 years?

• $1,307.84

• $1,607.84

• $1,407.84

• $1,507.84

Tags

CCSS.HSA.SSE.A.1

CCSS.HSF.LE.A.1

CCSS.HSF.LE.A.2

CCSS.HSA.CED.A.1

CCSS.HSF.BF.A.1

What is the formula for calculating simple interest?

• I = P - r - t

• I = P + r + t

• I = P * r * t

• I = P / r / t

What is the formula for calculating compound interest?

• A = P * (1 + r/n)^(n*t)

• A = P + r + n + t

• A = P / (1 + r/n)^(n*t)

• A = P - r - n - t

Tags

CCSS.HSA.SSE.A.1

CCSS.HSF.LE.A.1

CCSS.HSF.LE.A.2

CCSS.HSA.CED.A.1

CCSS.HSF.BF.A.1

Which type of interest does not take into account the interest earned in previous periods?

• Simple Interest

• Compound Interest

• Neither

• Both

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CCSS.HSF.LE.A.1

CCSS.HSF.LE.A.2

Which type of interest takes into account the interest earned in previous periods?

• Neither

• Both

• Compound Interest

• Simple Interest

Tags

CCSS.HSA.SSE.A.1

CCSS.HSF.LE.A.1

CCSS.HSF.LE.A.2

What is the main difference between simple interest and compound interest?

• Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and the accumulated interest.

• There is no difference between simple interest and compound interest.

• Simple interest is calculated on both the principal and the accumulated interest, while compound interest is calculated only on the principal amount.

• Simple interest is calculated using a different formula than compound interest.

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CCSS.HSF.LE.A.1

CCSS.HSF.LE.A.2

Which of the following is an example of compound interest?

• Earning $10 in interest on a $100 deposit after 1 year at a 10% interest rate, and then earning $10 in interest on a $110 deposit after another year at a 10% interest rate.

• Earning $10 in interest on a $100 deposit after 1 year at a 10% interest rate, and then earning $10 in interest on a $100 deposit after another year at a 10% interest rate.

• Earning $10 in interest on a $100 deposit after 1 year at a 10% interest rate, and then earning $11 in interest on a $110 deposit after another year at a 10% interest rate.

• Earning $10 in interest on a $100 deposit after 1 year at a 10% interest rate.

Tags

CCSS.HSA.SSE.A.1

CCSS.HSF.LE.A.1

CCSS.HSF.LE.A.2

CCSS.HSA.CED.A.1

CCSS.HSF.BF.A.1