Simple & Compound Interest

Smithville Bank is offering each of it's customers a record 3.4% interest on new savings account. If Mr. Thomas opens an account with $1,500, how much interest will he earn in 3 years?

• $15,300
• $1,530
• $153
• The answer is not shown

The simple interest formula is I=Prt.  The P represents the principle.  The principle is ___________________. 

• the amount of money borrowed or deposited
• the amount taxed
• the percent interest for this year
• the amount the bank owes you for being a customer at their bank

Find the simple interest:
Principal: $6,000
Interest Rate: 5%
Time: 6 months

• $150
• $1,800
• $1,500
• $15,000

Ann puts $300 in a bank account earning 4% interest.  How much will she earn in interest in 1 year?

• 4
• 8
• 12
• 16

Find the compound interest:
Principal: $1735
Interest Rate: 0.8%
Time: 1 year

• $1,388
• $138.80
• $13.88
• None of the answers are correct.

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

If you are calculating the simple interest and you are given the time in months.  How can you find the time in years?

• divide 12 by the months
• multiply 12 times the months
• divide the months by 12
• change the months to a decimal

I = Prt where r represents the rate.  Rates must be converted into ____ before multiplying.

• fractions
• mixed numbers
• decimals
• integers

What is the formula for simple interest?

• A=P(1+r)^t
• I=Prt
• I=P(1+r)t
• A=Prt

What is important about how time is calculated in I= Prt ?

• it must be in months
• it must be in years
• it is not calculated