Simple and Compound Interest Word Problems

Aaron deposited $3,000 into a savings account. How much will Aaron have in his account after 5 yearsat an annual compound interest rate of 3¼%?

• $3520.23

• $520.23

• $4159.70

• $5482.14

Harley wants to buy a car that costs $15,000.  Bank One offers her a 3 year loan at a simple interest rate of 9%.  Bank Two offers her a 5 year loan at an annual compound interest rate of 3.5%.  Which bank offer should she choose?

• She will pay $1,234.70 less if she chooses Bank Two.

• She will pay $1,234.70 less if she chooses Bank One.

Both Ryan and Tom open their accounts with an initial deposit of $3500. They are both planning a six-year investment and will withdraw their money after 6 years. Who will have a greater balance in six years? How much more will that person have?

• Tom will have $83.77 more than Ryan.

• Ryan will have $83.77 more than Tom.

• Ryan will have $3416.23 more than Tom.

• Tom will have $3416.23 more than Ryan.

Rosie will deposit $1,420 in an account that earns 4% simple interest every year for 4 years. Her sister Avery will deposit $1,400 in an account that earns 6% interest compounded annually for 4 years.  What is the difference in the amount earned between the two sisters over the 4 years?

• Rosie will earn $120.27 more than Avery.

• Avery will earn $1540.27 more than Rosie.

• Rosie will earn $1540.27 more than Avery.

• Avery will earn $120.27 more than Rosie.

Monica is depositing $6,000 into a savings with an interest rate of 4.25% for 8 years. How much more interest will she earn if the interest is compounded annually, as opposed to simple interest?

• $2040.00

• $2370.66

• $330.66

• $5669.34

A bank is offering 2.5% simple interest on a savings account.  If you deposit $5,000, how much interest will you earn in three years?

• $5375

• $375

• $37500

• $42500

Sarah borrowed $18,000 for 4 years at an annual simple interest rate of 7%.  What is the total amount she will repay for the car loan?

• $504000

• $5040

• $23040

• $18000

Ricco deposits $500 in an account that earns 2.5% interest compounded annually for 3 years.  Wally deposits $500 in an account that earns 5.1% interest compounded annually for 2 years.  Who will earn the greatest amount of interest?

• Ricco will earn $13.85 more than Wally

• Wally will earn $13.85 more than Ricco

Rosa invests her tax return check into an account with a compounded interest rate of 1 3/4 %. She plans on keeping the account open for 12 years. If she has $1600.87 in her account at the end of 12 years, approximately how much was her initial investment?

• $1,300

• $1,970

• $7,690

• $11,000

A compound interest account has accrued an account balance of $1,159.27 over the course of 5 years. The interest rate paid was 3%. Which is closest to the principal amount on the account?

• $1,000

• $1,300

• $300

• $4,300