GENMATH-2ND QUARTER EXAM REVIEWER

Which of the following statements best describes simple interest?

• Interest is computed on the original principal only.

• Interest is computed on both principal and previous interests.

• Interest rate changes every year.

• Interest is given only at the end of the term.

In compound interest, the interest for the next period is computed based on:

• The original principal only

• The previous interest only

• The principal plus accumulated interest

• The rate of inflation

How much interest will Anna earn after 3 years?

(Use simple interest formula: I = P × r × t)

• ₱1,500

• ₱1,000

• ₱1,800

• ₱2,000

How much total amount will Ben have after 3 years

under compound interest?
(Use A = P(1 + r)ⁿ)

• ₱11,500

• ₱11,576.25

• ₱11,600

• ₱11,800

Who earned more after 3 years?

• Anna earned more.

• Ben earned more.

• Both earned the same.

• Cannot be determined.

What does the result imply about compound interest compared to simple interest?

• Compound interest grows slower because it is applied yearly.

• Simple interest grows faster because it is fixed.

• Compound interest grows faster because it earns on previous interests.

• Both are equal if rates are the same.

If you were to invest ₱20,000 for 5 years, which type of interest would you choose and why?

• Simple interest, because it’s easier to compute.

• Simple interest, because it gives steady growth.

• Compound interest, because your money grows exponentially over time.

• Compound interest, because interest rate stays constant.

Which of the following best describes an annuity?

• A single payment made at one time.

• A series of equal payments made at regular intervals.
  
  

• A loan paid at irregular times.

• A deposit made randomly.

Which of the following statements correctly differentiates a simple annuity from a general annuity?

• In a simple annuity, the payment period and compounding period are the same.

• In a general annuity, payments are made only once.

• Simple annuity uses variable interest rates.

• Both simple and general annuities always have different compounding periods.

How much will Emma have after 20 years if her ₱5,000 monthly deposits earn 6% annual interest, compounded monthly?
(Use FV = P × [((1 + i)ⁿ – 1) / i], where i = r/m and n = m × t)

• ₱1,000,000

• ₱2,100,000

• ₱2,292,000

• ₱2,300,000