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Worksheet: Exponential Growth: Compound Interest

Q1:

Jennifer decides to put in a savings account with an interest rate of per year. What is the total amount of money that Jennifer will have in her savings account after years?

  • A
  • B
  • C
  • D
  • E

Q2:

Anthony wants to buy an RV for his family holidays. He has researched the different models and decided he needs to spend about to get one suitable for his family. He wants to get a loan to pay for the RV and pay it off in 5 years. His bank charges annual interest, compounded monthly.

What is the monthly payment required to pay for the RV in 5 years?

Anthony can only afford to pay a maximum of $500 every month and does not want to make a down payment. What is the maximum he can pay for an RV? Give your answer to the nearest hundred dollars.

Q3:

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

Q4:

An account pays interest every 3 months. On an initial deposit of dollars, what is the amount after years?

  • A
  • B
  • C
  • D
  • E

Q5:

During a boom in the real estate market, the value of properties increased on average by every year. What was the percentage increase every 5 years?

  • A
  • B
  • C
  • D
  • E

Q6:

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.

Q7:

Liam deposited $100 in an account with an annual interest rate of , where the amount of the interest is added to his account at the end of each year. Given that he did NOT withdraw any money in 3 years, determine the amount of money (in dollars and cents) in his account at the end of each year.

  • A$153.00, $161.11, $169.65
  • B$105.30, $110.60, $115.90
  • C$153.00, $234.09, $358.16
  • D$105.30, $110.88, $116.76
  • E$110.88, $110.60, $116.76

Q8:

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.