Business Math and Logic Review Quiz

Which of the following is a key difference between simple interest and compound interest?

• Simple interest grows faster than compound interest.

• Compound interest is calculated on the principal only, while simple interest is calculated on both principal and accrued interest.

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

• Both simple and compound interest are calculated on the same basis.

If $1,000 is invested for 3 years at an annual interest rate of 10%, which type of interest yields a greater amount?

• Simple interest

• Compound interest (compounded annually)

• Both yield the same

• Cannot be determined

If $2,000 is invested for 5 years at a 6% annual interest rate, what is the total amount with simple interest?

• $2,600

• $2,400

• $2,800

• $3,000

What is the total amount if $1,500 is invested for 4 years at an annual interest rate of 5%, compounded annually?

• $1,800

• $1,823.26

• $1,838.44

• $1,900

Sarah invests $2,000 for 5 years at an annual interest rate of 4%. If she chooses simple interest, how much less will she earn compared to compound interest compounded annually?

• $32.80

• $20

• $50

• $40.80

John has two investment options:

1. $3,000 invested at 6% simple interest for 4 years.

2. $3,000 invested at 6% compound interest compounded annually for 4 years.
   Which option gives John more total interest?

• Option 2 by $36

• Option 1 by $72

• Option 1 by $36

• Option 2 by $72

Anna deposits $500 at the end of every year for 5 years into an account that earns an annual interest rate of 6%. What is the future value of the annuity?

• $2,650.50

• $2,818.20

• $2,500

• $2,825.50

Jessica wants to withdraw $1,000 annually for 5 years from an account earning 4% interest, how much should she deposit today?

• $4,200.50

• $4,000

• $4,624.32

• $4,451.82

Sarah deposits $500 every 6 months into an account that compounds interest quarterly at an annual interest rate of 8%. What will be the future value of her annuity after 4 years?

• $4,000

• $4,324.57

• $4,552.35

• $4,831.28

Mike wants to withdraw $1,200 every month for 5 years from an account that compounds interest semiannually at an annual interest rate of 6%. How much should he deposit today?

• $63,345.24

• $64,125.65

• $62,986.54

• $62,150.12