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In this lesson, we will learn how to deal with compound interest.

Q1:

Ramy invests at a interest rate per year, compounded quarterly. Find the balance after 10 years.

Q2:

Dina opened a retirement account with 7 . 2 5 % APR in the year 2000. Her initial deposit was $ 1 3 5 0 0 . 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?

Q3:

When Sameh was born, his grandparents invested in a fund that would mature on his 21st birthday. If the fund earned per year, compounded annually, how much was its value when it matured? Give your answer to the nearest dollar.

Q4:

An investment account with an annual interest rate of 7 % was opened with an initial deposit of $ 4 0 0 0 . Compare the values of the account after 9 years when the interest is compounded annually, quarterly, monthly, and continuously.

Q5:

Maged wants to save for a down payment on a home. How much will he need to invest in an account with APR, compounding daily, in order to reach his goal in 5 years?

Q6:

Sally deposits $1 500 into a retirement fund each year. The fund earns annual interest, compounded monthly. If she opened her account when she was 19 years old, how much will she have saved by the time she is 55? How much of that amount will be interest earned?

Q7:

Amir deposits $100 in a savings account that gives him a 1 5 % interest on his savings each month. Adam has $350 in a cashing account that he withdraws $5 from each month. After how many months do the two have approximately the same bank balance?

Q8:

Which of the following functions describes the total amount of money available after investing $ 5 0 0 0 at a rate of 2 . 3 % for 𝑡 years, compounded continuously?

Q9:

Sameh 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?

Q10:

A man deposited 1,569 LE in a bank account with an interest rate of 2 % per year. Determine how much money was in the account 5 years later, given that the interest was compounded quarterly. Give your answer correct to one decimal place.

Q11:

The price of an article increases by 9 % every year. Given that its original price was 3 652 LE, determine its price after 7 years. Give your answer to the nearest pound.

Q12:

A man deposited 1,078 LE in a bank account with an interest rate of 7 % per year. Determine how much money was in the account 5 years later, given that the interest was compounded monthly. Give your answer correct to one decimal place.

Q13:

A man deposited 5,094 LE in a bank account with an interest rate of 7 % per year. Determine how much money was in the account 19 years later, given that the interest was compounded annually. Give your answer correct to two decimal places.

Q14:

Bank 𝐴 offers depositors 4 % annual interest compounded once per year. Bank 𝐵 offers 3 . 9 3 % per year, compounded monthly.

Write an explicit formula for the return 𝑅 after 𝑛 years on a deposit of 𝑅 dollars with both offers.

Which bank’s offer is better?

Q15:

To the nearest tenth of a year, how long will it take for an investment of $ 2 0 0 0 to double if the interest rate is 3 . 5 % per year, compounded continuously?

Q16:

An investment compounded continuously tripled in five years. Find, to the nearest percent, the annual interest rate.

Q17:

Samar invested at an interest rate of compounded continuously. After how many years and months will her investment be worth ?

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