Mastering Interest: Real-Life Applications & Formulas

1. Sarah invests $1,000 in a savings account that earns a simple interest rate of 5% per year. How much interest will she earn after 3 years?

• $150

• $75

• $200

• $100

2. John takes out a loan of $2,500 with a simple interest rate of 6% per year. How much total interest will he pay after 4 years?

• $600

• $400

• $800

• $1,200

3. A bank offers a compound interest rate of 4% per year. If Emily deposits $1,200, how much will she have in her account after 2 years? (Assume interest is compounded annually)

• $1,200.00

• $1,297.92

• $1,400.00

• $1,250.00

4. Mark invests $800 in a fund that offers a compound interest rate of 3% per year. How much will he have after 5 years? (Assume interest is compounded annually)

• 927.42

• 900.50

• 1000.00

• 850.00

5. If a car loan of $15,000 has a simple interest rate of 7% for 3 years, what will be the total amount paid back at the end of the loan period?

• $16,500

• $19,200

• $17,000

• $18,150

6. Lisa wants to save for a vacation and deposits $2,000 in a bank that offers 5% compound interest, compounded annually. How much will she have after 3 years?

• 2500.00

• 2200.50

• 2005.00

• 2315.25

7. A credit card company charges 18% annual interest on unpaid balances. If Tom has a balance of $1,500, how much interest will he owe after 1 year if he does not make any payments?

• $300

• $270

• $180

• $450

8. A student takes a loan of $5,000 at a simple interest rate of 5% for 2 years. What is the total amount he will need to repay at the end of the loan term?

• $4,500

• $6,000

• $5,200

• $5,500

9. If a principal amount of $3,000 is invested at a compound interest rate of 6% per year, how much will it grow to after 4 years? (Assume interest is compounded annually)

• 4000.00

• 3500.00

• 3600.00

• 3787.43

10. Jessica invests $1,500 in a savings account with a simple interest rate of 4% per year. How much total money will she have after 5 years, including the principal and interest?

• $1,800

• $1,650

• $1,500

• $2,000