Compound Interest

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Show your work for each problem.

1.
In the compound interest formula , what does the exponent represent?
1. a)Interest rate
2. b)Time in years
3. c)Principal
4. d)Total amount
2.
Calculate (round to 4 decimal places).
3.
You invest 1000 dollars at 4% compound interest for 1 year. How much will you have?
1. a)1040 dollars
2. b)1400 dollars
3. c)40 dollars
4. d)1004 dollars
4.
Calculate the final amount: 500 dollars at 6% compound interest for 2 years.
5.
What is ? Round to 4 decimal places.
6.
You invest 2000 dollars at 5% compound interest for 4 years. What is the final amount?
7.
1000 dollars invested at 7% compound interest for 5 years. What is the interest earned? Round to the nearest dollar.
8.
Compare: 3000 dollars at 6% for 3 years. How much MORE does compound interest earn than simple interest?
1. a)573 dollars
2. b)33 dollars
3. c)540 dollars
4. d)3573 dollars
9.
You invest 5000 dollars at 8% compound interest for 6 years. Find the total interest earned.
10.
Which grows faster: 1000 dollars at 10% for 5 years (compound) or 2000 dollars at 5% for 5 years (compound)?
1. a)2000 dollars at 5% gives more (2553 dollars)
2. b)They give the same amount
3. c)Cannot determine
4. d)1000 dollars at 10% gives more (1611 dollars)
11.
You want 15000 dollars in 10 years. At 6% compound interest, how much must you invest now?
12.
10000 dollars grows to 16289 dollars in 10 years with compound interest. What was the annual rate? Give answer as percentage.
13.
The Rule of 72: To estimate doubling time, divide 72 by the interest rate. At 8%, approximately how many years to double your money?
1. a)12 years
2. b)72 years
3. c)9 years
4. d)8 years
14.
You have 500 dollars credit card debt at 18% compound interest. If you make no payments for 4 years, how much will you owe?
15.
Why does compound interest grow faster than simple interest over time?
1. a)The rate increases each year
2. b)Simple interest has a cap
3. c)The principal changes each year
4. d)You earn interest on previously earned interest