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Lesson: Compound Interest

Worksheet: Compound Interest • 18 Questions

Q1:

A bank offers a savings account with an annual interest rate. For an initial investment , the capital after years is given by . What is the annual interest rate?

  • A
  • B
  • C
  • D
  • E

Q2:

David invested in a fund with a guaranteed annual growth of .

Write an expression for the value of his fund after years.

  • A
  • B
  • C
  • D
  • E

The fund’s growth is calculated monthly.

We can rewrite the expression for the fund’s value as .

Use the new form of the expression to find the monthly growth rate. Give your answer to 3 significant figures.

Q3:

Victoria has that she wants to invest. Her bank has several investment accounts to choose from, all compounding daily. Her goal is to have by the time she finishes graduate school in 6 years. Find, to the nearest hundredth of a percent, the minimum annual interest rate she would need? Solve the compound interest formula for the interest rate.

Q4:

Matthew decides to save every month for 4 years. He can save in an account that pays annual interest of or an account that pays annual interest of compounded monthly. Which account will give the better return on his investment?

  • Athe account that pays compounded monthly
  • Bthe account that pays an annual interest of

Q5:

Amelia opened a retirement account with APR in the year 2000. Her initial deposit was . How much will the account be worth in 2025 if the interest compounds monthly? How much more would she make if the interest compounded continuously?

  • A, $124.13
  • B, $176.20
  • C, $449.75
  • D, $299.19
  • E, $182.21
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