Mastering Compound Interest: Real-World Applications

A bank offers a savings account with an annual interest rate of 5% compounded annually. If you deposit $1,000, how much money will you have in the account after 3 years?

• 1050.75

• 1157.63

• 1100.50

• 1200.00

You invest $2,000 in a fund that compounds interest at a rate of 4% per year. How much will your investment be worth after 5 years?

• 2500.50

• 2000.00

• 2433.31

• 3000.00

A population of bacteria doubles every 4 hours. If you start with 500 bacteria, how many will there be after 24 hours?

• 4000

• 8000

• 32000

• 16000

You take out a loan of $5,000 with an interest rate of 6% compounded annually. How much will you owe after 2 years?

• 5618.30

• $5,300.00

• $6,000.00

• $5,000.00

A car's value depreciates at a rate of 15% per year. If the car was purchased for $20,000, what will its value be after 3 years?

• 15000

• 17147.50

• 18000

• 20000

You invest $1,500 in a retirement account that earns 7% interest compounded annually. How much will you have in the account after 10 years?

• $3,200.50

• $2,500.00

• $2,950.73

• $1,800.00

A certain investment grows to $10,000 in 8 years at an annual interest rate of 3% compounded annually. What was the initial investment?

• 8000.00

• 7500.50

• 7895.84

• 9000.25

A tree grows at a rate of 10% per year. If the tree is currently 2 meters tall, how tall will it be after 5 years?

• 2.5 meters

• 4.0 meters

• 3.22 meters

• 5.0 meters

You deposit $800 into an account that pays 5% interest compounded quarterly. How much will you have in the account after 2 years?

• 883.59

• 875.50

• 900.00

• 850.00

A company’s revenue grows exponentially at a rate of 12% per year. If the current revenue is $50,000, what will it be in 4 years?

• $60,000.00

• $70,000.00

• $90,000.00

• $78,740.14