Compound Interest

Interest is calculated more than once a year in compound interest

• True

• False

Identify the number of times interest calculated in a year if the interest is compounded every two months

• m=2

• m=6

• m=4

• m=3

Find the future value on an investment of RM2,500 for 3 year if it is invested at 9% compounded monthly.

• 3721.61

• 3268.35

• 3255.65

• 3271.61

If RM3,500 accumulates to RM4,703.71 in 5 years, what is the interest rate compounded semi-annually

• 60%

• 6.5%

• 6%

• 2%

Nominal rate is the rate that calculated once in a year

• True

• False

Find the effective rate that equivalent to 3.5% compounded every 4 months

• 3.45%

• 3.54%

• 34.5%

• 35.4%

You borrowed $59,000 for 2 years at 11% which was compounded annually.  What total will you pay back?

• $13,693.90
• $1,363.90
• $72,693.90
• $73,793.90

Your returns (or interest rate) are 8% a year. How long before your investment doubles?

• 9 years
• 8 years
• 7 years
• Never

In the compound interest formula A=P(1+r)^t what does the A stand for?

• The amount of interest

• The total amount

• The interest rate

• The time

Julia invested $1000 for college in an account earning 5% compounded annually. When she checked the account after 4 years, how much money did she find in the account?

• Not enough

• $563.24

• $1215.51

• $3200.12