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Compound Interest

Total questions: 20

Worksheet time: 1hrs 2mins

Name
Class
Date
1.

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

a)

The amount of interest

b)

The total amount

c)

The interest rate

d)

The time

2.

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

a)

The time

b)

The total amount

c)

The principal amount (original amount)

d)

The interest rate

3.

Jacob borrows $500 from Abraham and agrees to have the loan compounded annually for 5 years with an interest rate of 2.5%. How much will the total amount be that Jacob owes?

a)

$565.70

b)

$262609.38

c)

$65.70

d)

$630.20

4.

Henry deposits $750 into a college savings account that is compounded annually when his parents received as a stimulus package. If Henry lets the money sit in the account without adding or removing any and receives a 8.5% interest rate, how much money will he have total after 5 years?

a)

$1127.74

b)

$1535.24

c)

$2345.67

d)

$850.76

5.

If you wanted to amount of interest an account has earned after being compounded annually. What would you have to do after you found "A" using the formula A=P(1+r)t ?

a)

Add A (total amount) plus P (original amount)

b)

Subtract A (total amount from P (original amount)

c)

Add P (original amount) plus A (total amount)

d)

Subtract P (original amount) from A (total amount)

6.

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?

a)

Not enough

b)

$563.24

c)

$1215.51

d)

$3200.12

7.
John just opened a savings account and wants to maximize the amount of interest he earns. Which of the following actions enable him to earn MORE interest?
a)
selecting an account with a higher interest rate
b)
leaving his money in the account for a long period of time
c)
transferring money into his checking account each month
d)
higher interest rate AND leaving money in for a longer time
8.
Jay'den earned $475 from mowing lawns last summer. He deposited this money in an account that pays an interest rate of 3.8% compounded annually. What will be his balance after 15 year?
a)
$827.52
b)
$831.10
c)
$839.45
d)
$846.80
9.
The Arnold's took out a loan for $195,000 to purchase a home. At a 4.3% interest rate compounded annually, how much total will they have paid after 30 years?
a)
$412,749.79
b)
$529.305.61
c)
$689,546.99
d)
$640,891.53
10.
Your 3 year investment of $20,000 received 5.2% interest compounded annually.  What is your total return?
a)
$23,285.05
b)
$3,285.05
c)
$2,385
d)
$32,285
11.
Change 6.75% to a decimal.
a)
67.5
b)
.675
c)
675
d)
.0675
12.
You borrowed $1,690 for 5 1/2 years at an interest of 5.7% compounded annually.  How much extra did you pay by taking out the loan?
a)
$602.45
b)
$2,292.45
c)
$1,87.55
d)
$3,982.45
13.

Principal: $5000

Interest Rate: 3.75% p.a.

Time: 25 years Compounded Monthly

State the future account balance.

a)
$12712.31
b)
$12,749.30
c)
$12,657.59
d)
$12550.84
14.
If you are calculating the simple interest and you are given the time in months.  How can you find the time in years?
a)
divide 12 by the months
b)
multiply 12 times the months
c)
divide the months by 12
d)
change the months to a decimal
15.
What is the formula for simple interest?
a)
A=P(1+r)t
b)
I=Prt
c)
I=P(1+r)t
d)
A=Prt
16.
You invested $1,900 at 4% interest compounded annually for 3 years.  How much interest did you earn in 3 years?
a)
$2,372.40
b)
$237.24
c)
$2,137.24
d)
$3,197.60
17.

Bruno was given $2000 at birth . His parents invested it at a 2% interest rate compounded annually. No deposits or withdrawls were made. Which expression can be used to determine how much money Bruno had in the account when he turned 13?

a)

2000(1+0.02)13

b)

2000(1-0.02)13

c)

2000(1+0.02)16

d)

2000(1-0.02)16

18.

What does r represent?

a)

interest rate

b)

time

c)

principal

d)

total amount

19.

Mark took a loan out for $25,690 to purchase a truck. At an interest rate of 5.2% p.a. compounded monthly, how much total will he have paid after 5 years.

a)
$33,299.42
b)
$33,672.68
c)
$34,157.04
d)
$34,389.55
20.
Karla invested $1,000 in savings bonds. If the bonds earn 6.75% interest compounded semi-annually, how much total will Karla earn in 15 years?
a)
$1,584.62
b)
$2,651.39
c)
$2,706.86
d)
$1,825.10