Business Mathematics Reviewer

Which type of loan results in a lower total interest paid over time, assuming all other factors are equal: a simple or compound interest loan?

• Simple interest

• Compound interest

• They are the same.

How do you write 5% as a decimal?

• 5.0

• 0.5

• 0.05

• 0.005

How do you write 23% as a decimal?

• 23.0

• 2.3

• 0.23

• 0.023

What is 5.6% written as a decimal?

• 5.6

• 0.56

• 0.056

• 0.0056

Christine takes out a 4-year simple interest car loan for 15,000 at a 3% interest rate. If she does not make any payments, how much interest will she owe at the end of 4 years?

• 1,800

• 18,000

• 16,800

• 33,000

How do you convert 12.5% into a decimal?

• 1.25

• 0.125

• 0.0125

• 0.1250

What is 15% expressed as a decimal?

• 0.15

• 1.05

• 1.5

• 0.015

If a loan has a compound interest rate of 5% per year, how much interest will be earned on a principal of 1,000 after 2 years?

• 100

• 102.50

• 105.00

• 110.25

 It refers to the original sum of money borrowed or invested.

• Present Value

• Principal Amount

• Interest Rate

• Future Value

Which of the following is true about simple interest?

• The principal amount is always the same

• Interest is earned on both principal and interest

• Interest is added to the principal amount

• Principal amount changes over time