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Lesson: Exponential Growth: Compound Interest

Video

13:15

Sample Question Videos

Worksheet • 15 Questions • 1 Video

Q1:

If you invest $ 5 0 0 0 in an account paying 4.5% interest compounded monthly, how much will the account be worth in 10 years?

  • A $ 7 8 3 4 . 9 6
  • B $ 5 1 9 0 . 7 0
  • C $ 5 2 2 9 . 7 0
  • D $ 4 1 4 5 1 7 . 2 9

Q2:

David invested $ 𝑉 in a fund with a guaranteed annual growth of 1 2 % .

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

  • A 𝑉 ( 1 . 1 2 ) 𝑑
  • B 𝑉 ( 0 . 1 2 ) 𝑑
  • C 𝑉 ( 0 . 8 8 ) 𝑑
  • D 0 . 8 8 ( 𝑉 ) 𝑑
  • E 1 . 1 2 ( 𝑉 ) 𝑑

The fund’s growth is calculated monthly.

We can rewrite the expression for the fund’s value as 𝑉 ο€½ 1 . 1 2  1 1 2 1 2 𝑑 .

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

Q3:

The return 𝑅 dollars after 𝑑 years on a savings account is given by the explicit formula 𝑅 = 1 2 3 4 ο€Ό 1 + 0 . 0 5 4  4 𝑑 . What are the meanings of the numbers 1 2 3 4 , 1.05, and 4?

  • AThe initial deposit is $ 1 2 3 4 ; the annual interest rate is 5 % and it is compounded 4 times a year.
  • BThe initial deposit is $ 1 2 3 4 ; the annual interest rate is 1 . 0 5 % and it is compounded 4 times a year.
  • CThe initial deposit is $ 1 2 3 4 ; the annual interest rate is 1 . 2 5 % and it is compounded 4 times a year.
  • DThe initial deposit is $ 1 2 3 4 ; the annual interest rate is 1 . 2 5 % and the number of deposit years is 4.
  • EThe initial deposit is $ 1 2 3 4 ; the annual interest rate is 5 % and the number of deposit years is 4.
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