Arithmetic Sequencing and Compound Interest

To earn as much interest as possible, you should open a savings account that earns ______ interest and has the _____ interest rate.

• compound; lowest

• simple ; lowest

• compound ; highest

• simple ; highest

In the compound interest formula A=P(1+r)^t what does the A stand for?

• The amount of interest

• The total amount

• The interest rate

• The time

In the compound interest formula A=P(1+r)^t what does the P stand for?

• The time

• The total amount

• The principal amount (original amount)

• The interest rate

Jacob borrows $500 from Abraham and agrees to have the loan compounded annually for 5 years with an interest rate of 2.5%. How much will the total amount be that Jacob owes?

• $565.70

• $262609.38

• $65.70

• $630.20

Trevor wants to have $4000 saved up in 3 years for a car. If he invests $1500 in a savings account that is compounded annually at an interest rate of 12%, will he have enough money at the end of the 4 years?

• Yes

• No

Chris borrows $450 from Gavin. Gavin lets Chris choose either a simple interest loan for 10 years with a 3.5% interest rate or a loan compounded annually for 7 years with a 2% interest rate. Which should Chris choose if he wants the cheaper plan? Use I=P*r*t for simple interest (make sure to add I plus P at the end) and A=P*(1+r)^t for compound interest.

• The simple interest plan

• The compound interest plan

Daniel invests $360 in a bank account that is compounded annually for 8 years with an interest rate of 5.5%. What will be the total amount in the account after the 8 years is over?

• $625.88

• $950.12

• $315.45

• $552.49

Your allowance of $190 earned an interest of 11% compounded annually for 1 2/3 years.  How much interest did you earn on your allowance?

• $343.90

• $153.90

• $226.10

• $36.10

Your $440 gets 5.8% interest compounded annually for 8 years. What will your $440 be worth in 8 years?

• $250.78

• $690.78

• $1,130

• $940.78

You invested $1,900 at 4% interest compounded annually for 3 years.  How much interest did you earn in 3 years?

• $2,372.40

• $237.24

• $2,137.24

• $3,197.60