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Name:__________________________ Simple and Compound Interest Review Activity

Per: _____

Date: ___________

Calculate for the missing amount assuming there are 365 days in a year. In the space provided write the formula you used. SHOW ALL WORK Interest 1 $56.79 Principal $2,500

SI = P * R * T
Rate 5% Time

$2,000

8%

90 Days

$398.56

$6,500

120 days

$4,500

12%

150 days

Simple Interest Word Problems


1. You put $1000 into an investment yielding 6% annual interest; you left the money in for two years. How much interest do you get at the end of those two years?

2. You invested $500 and received $650 after three years. What had been the interest rate?

3. Greg invests $1200 at an annual rate of 6.5%. How long will it take until Greg earns $195 in interest?

4. You invest $80 at a simple annual interest rate of 2%. How much simple interest would you earn in 1.5 years?

5. Nancy owes $38,000 in student loans. The interest rate on her loans is 8.25%. She will be paying these loans off for 20 years. How much will she pay altogether?

Compound Interest - SHOW ALL WORK Compounded Annually


Principal $9,500 Rate 6% Time (years) 4 Compounded Interest

$6,000

12%

Compound Interest Quarterly and Monthly


Quarterly = P (1 + r/4)4 = (quarterly compounding) Interest is compounded 4 times per year, every quarter. You must divide the interest rate by 4 and compound the interest back on the principal 4 times for every year. Monthly = P (1 + r/12)12 = (monthly compounding) Interest is compounded 4 times per year, every quarter. You must divide the interest rate by 12 and compound the interest back on the principal 12 times for every year.

You invest $1,000 in an account at 12% interest for 1 year. The interest is compounded quarterly. How much would you earn in interest at the end of the year?
Although, the money is invested for only 1 year, you must compound the interest 4 times at an interest rate of 3% (12%/4). The solution looks like this. Q1 Q2 Q3 Q4 Total Principal $1,000(.03) = $1,030(.03) = $1,060.90(.03) = $1,092.73(.03) = $1,125.51 Total Interest $30.00 $30.90 $31.83 $32.78 $125.51

You invest $1,000 in an account at 12% interest for 1 year. The interest is compounded monthly. How much would you earn in interest at the end of the year?
Although, the money is invested for only 1 year, you must compound the interest 12 times at an interest rate of 1% (12%/12). The solution looks like this. Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 $1,000(.01) = $1,010(.01) = $1,020.10(.01) = $1,030.30(.01) = $10.00 $10.10 $10.20 $10.30

Etc. Until you reach Q12

Compound Interest Word Problems SHOW ALL WORK


1. You invest $5,000 in an account at 16% interest for 1 year. The interest is compounded quarterly. How much would you earn in interest at the end of the year?

2. You invest $3,500 in an account at 8% interest for 6 months. The interest is compounded monthly. How much would you earn in interest at the end of the 6 months?

3. You invest $9,000 in an account at 4% interest for 2 year. The interest is compounded semi-annually. How much would you earn in interest at the end of the 2 years?

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