Compound Interest & Depreciation (Let’s Buy a Car!)

The video tutorial covers exponential growth and decay functions, focusing on compound interest and depreciation. It explains how compound interest is calculated and applied in real-world scenarios, such as savings accounts and loans. The tutorial includes exercises for students to practice calculating compound interest and understanding the financial implications of loans and depreciation.

What is one of the main objectives of learning about exponential growth and decay functions?

• To calculate taxes

• To learn about stock market trends

• To identify principal and interest

• To understand the history of banking

How is compound interest different from simple interest?

• Compound interest is earned on both the principal and previously earned interest.

• Compound interest decreases over time.

• Compound interest is calculated annually, while simple interest is monthly.

• Simple interest is more common in savings accounts.

What is the main reason for using compound interest in savings accounts?

• It provides a fixed return.

• It is easier to calculate.

• It is less risky.

• It allows earning interest on previously earned interest.

In the compound interest formula, what does 'n' represent?

• The principal amount

• The total time in months

• The annual interest rate

• The number of times interest is compounded per year

If you deposit $100 at an annual interest rate of 6% compounded monthly, what will be the balance after 5 years?

• $106.00

• $150.00

• $134.89

• $120.00

What is the base of the power in the compound interest formula for a 9% annual interest rate compounded monthly?

• 1.09

• 1.075

• 1.0075

• 1.009

How much will you have in your savings account after 7 years if you deposit $500 at 9% annual interest compounded monthly?

• $700.00

• $936.60

• $800.00

• $1000.00

What is the total cost of a car loan of $23,130 at 3.48% annual interest over 5 years?

• $30,000

• $20,000

• $27,519.05

• $25,000

How much will your car be worth after 5 years if it depreciates at 15% per year?

• $5,000

• $20,000

• $10,262.90

• $15,000

What is the monthly payment for a car loan of $23,130 at 3.48% annual interest over 5 years?

• $400.00

• $500.00

• $458.65

• $600.00