Compound Interest Expressions

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

What does the n stand for in this formula?

• Initial amount

• Final amount

• Rate

• Time

• The number of times compounded per year

What does the P stand for in this formula?

• Initial amount

• Final amount

• Rate

• Time

• The number of times compounded per year

The Arnold's took out a loan for a home. The amount was $195,000 at a 4% interest rate compounded annually, how much will they have paid after 30 years?

• $412,489.75

• $529,586.31

• $632,462.51

• $640,891.12

Given an investment of $1,500:
Which investment would have a larger balance after 5 years?

• 4% compounded monthly

• 3.9% compounded daily.

Cora invested $400 at a rate of 35% for 8 months, compounded continuously. How much is her investment worth after 8 months?

• $520.07

• $505.12

• $460.11

• $7,643.74