Simple and Compound Interest Word Problems

Garrison

deposited $500 in an account that earns 5% annual interest compounded annually. If he makes no withdrawals or deposits, how

much interest will the account earn after 4 years?

• $600

• $100

• $607.75

• $107.75

Jerry borrowed $4,000 for 5 years at 6% simple interest rate. How much interest is that?

• $800

• $1,000

• $1,200

• $1,500

The simple interest formula is I=Prt. What does the t represent?

• Principle

• Interest

• Time

• Percent Rate

The compound interest formula is:

A = P(1 + r)^t

What does the A represent?

• The amount of interest earned.

• The amount of time that has passed.

• The total amount of money after a certain amount of time.

• The amount required to invest.

A bank is offering 2.5% simple interest on a savings account.  If you deposit $5,000, what will be the total amount of money in your savings account after three years?

• $375

• $42500

• $5375

• $37500

Sarah borrowed $18,000 for 4 years at an annual simple interest rate of 7%.  How much interest will she pay at the end of the 4 years?

• $5040

• $23040

• $504000

• $18000

John deposited $2,000 into a savings account. How much will John have in his account after 7 years at a simple interest rate of 3¼%?

• $2455

• $455

• 4550

• 6550

A bank is offering 7% annual compound interest on a savings account.  If you deposit $1,500, how much interest will you earn in three years?

• $1837.56

• $337.56

• $30000

• $31500

Kara borrowed $21,000 for 5½ years at an annual compound interest rate of 7.5% to buy a car.  What is the total amount she will repay the bank for the auto loan?

• $31258.30

• $10258.30

• $981750

• $27165

Kara borrowed $21,000 for 5½ years at an annual compound interest rate of 7.5% to buy a car.  How much interest will she pay on top of the principal at the end of the 5½ years?

• $31258.30

• $27165

• $10258.30

• $981750