Comparing Simple and Compound Interest

Olivia will deposit $1,530 in an account that earns 6% simple interest every year.  Her sister Melinda will deposit $1,500 in an account that earns 8% interest compounded annually.  The deposits will be made on the same day, and no additional money will be deposited or withdrawn from the accounts.  Which statement about the balances of Olivia's account and Melinda's account at the end of 3 years is true?

• Olivia's account will have about $5.40 more than Melinda's account.
• Olivia's account will have about $84.17 more than Melinda's account.
• Melinda's account will have about $5.40 more than Olivia's account.
• Melinda's account will have about $84.17 more than Olivia's account.

Tags

TEKS.MATH.2A.5B

TEKS.MATH.A.9C

Nicolas has $650 to deposit into two different savings accounts.
    1) Nicolas will deposit $400 into Account 1, which earns 3.5% annual simple interest.
    2) Nicolas will deposit $250 into Account 2, which earns 3¼% interest compounded annually.
Nicolas will not make any additional deposits or withdrawals.  Which amount is closest to the total balance of these two accounts at the end of 2 years?

• $672.13
• $695.00
• $694.25
• $694.51

Tags

TEKS.MATH.2A.5B

TEKS.MATH.A.9C

Holly is taking out a loan in the amount of $10,000.  Her choices for the loan are a 4-year loan at 4% simple interest and a 6-year loan at 5% simple interest.  What is the difference in the amount of interest Holly would have to pay for each of these two loans?

• $1,600
• $3,000
• $4600
• $1,400

Tags

TEKS.MATH.7.4D

Steven is going to deposit $700 in an account that earns 4.8% interest compounded annually. His wife Linda will deposit $800 in an account that earns 7.7% simple interest each year.

They deposit the money on the same day and make no additional deposits or withdrawals from the accounts. Which account will have the most and by how much after 7 years?

• Linda by $431.20

• Steven by $540.71

• Linda by $259.29

• Steven by $331.85

Tags

TEKS.MATH.2A.5B

TEKS.MATH.A.9C

Steven is going to deposit $700 in an account that earns 4.8% interest compounded annually. His wife Linda will deposit $800 in an account that earns 7.7% simple interest each year.

They deposit the money on the same day and make no additional deposits or withdrawals from the accounts. Which account will have the most and by how much after 7 years?

• Linda by $431.20

• Steven by $540.71

• Linda by $259.29

• Steven by $331.85

Tags

TEKS.MATH.2A.5B

TEKS.MATH.A.9C

Moe’s mother is planning to borrow $20,000 to remodel the restaurant she owns. She contacted several loan companies, and she is comparing two different options.

• Company 1 offers an interest rate of 6.25%.

• Company 2 offers an interest rate of 9.5%.

Both loan options involve simple interest and must be repaid in exactly 8 years. How much more will Moe’s mother pay in interest if she chooses to borrow the money from Company 2?

• $27,000

• $52,000

• $2,700

• $5,200

Tags

TEKS.MATH.7.4D

Brianna’s mother is planning to borrow $35,000 to remodel the restaurant she owns. She contacted several loan companies, and she is comparing two different options.

• Company 1 offers an interest rate of 4.25%.

• Company 2 offers an interest rate of 5.5%.

Both loan options involve simple interest and must be repaid in exactly 9 years. How much more will Brianna’s mother pay in interest if she chooses to borrow the money from Company 2?

• $3,937.50

• $4,287.50

• $17,325

• $17,675

Tags

TEKS.MATH.7.4D