Level 3 · Challenge ← Back to lesson

Compound Interest: Practice

12 multiple-choice questions, progressively harder.

Level 3 · Challenge 0 / 12 answered

Question 1 of 12

1
You invest $1{,}000$ dollars at $6\%$ compounded continuously for $1$ year. Using $e^{0.06} = 1.061837$ , what is the balance?

Answer choices for question 1 A $1{,}061.84$ dollars B $1{,}060.00$ dollars C $1{,}061.36$ dollars D $1{,}618.37$ dollars
2
On $1{,}000$ dollars at $5\%$ for $2$ years, how much MORE does annual compounding earn than simple interest? Use $1.05^2 = 1.1025$ .

Answer choices for question 2 A $0$ dollars B $5.00$ dollars C $2.50$ dollars D $25.00$ dollars
3
You invest $4{,}000$ dollars at $10\%$ compounded annually for $3$ years. Using $1.10^3 = 1.331$ , what is the balance?

Answer choices for question 3 A $5{,}200$ dollars B $5{,}324$ dollars C $5{,}300$ dollars D $5{,}324.40$ dollars
4
Which deposit now grows to exactly $2{,}000$ dollars in $2$ years at $5\%$ compounded annually? Use $1.05^2 = 1.1025$ .

Answer choices for question 4 A $1{,}900.00$ dollars B $1{,}800.00$ dollars C $1{,}818.00$ dollars D $1{,}814.06$ dollars
5
You invest $1{,}000$ dollars at $10\%$ compounded continuously for $1$ year. Using $e^{0.10} = 1.105171$ , what is the balance?

Answer choices for question 5 A $1{,}105.17$ dollars B $1{,}100.00$ dollars C $1{,}110.00$ dollars D $1{,}051.71$ dollars
6
You invest $5{,}000$ dollars at $4\%$ compounded quarterly for $1$ year. Using $1.01^4 = 1.040604$ , what is the balance?

Answer choices for question 6 A $5{,}200.00$ dollars B $5{,}202.00$ dollars C $5{,}204.00$ dollars D $5{,}203.02$ dollars
7
A principal of $1{,}000$ dollars at $5\%$ reaches $1{,}157.63$ after $3$ years compounded annually. Compounded continuously at $5\%$ for $3$ years, using $e^{0.15} = 1.161834$ , it reaches:

Answer choices for question 7 A $1{,}157.63$ dollars B $1{,}161.83$ dollars C $1{,}150.00$ dollars D $1{,}500.00$ dollars
8
On $2{,}000$ dollars at $8\%$ for $1$ year, how much more does quarterly compounding earn than annual? Use $1.02^4 = 1.08243216$ .

Answer choices for question 8 A $0$ dollars B $8.00$ dollars C $4.86$ dollars D $40.00$ dollars
9
Compounding $P$ at rate $r$ for $t$ years $n$ times a year, then letting $n$ grow without bound, the balance approaches:

Answer choices for question 9 A $P(1+r)^t$ B $P(1 + rt)$ C infinity D $Pe^{rt}$
10
You invest $3{,}000$ dollars at $4\%$ compounded annually for $3$ years. Using $1.04^3 = 1.124864$ , what is the balance?

Answer choices for question 10 A $3{,}374.59$ dollars B $3{,}360.00$ dollars C $3{,}370.00$ dollars D $3{,}380.00$ dollars
11
You invest $1{,}000$ dollars at $20\%$ compounded annually for $2$ years. How much more does this earn than simple interest? Use $1.20^2 = 1.44$ .

Answer choices for question 11 A $0$ dollars B $20$ dollars C $40$ dollars D $44$ dollars
12
Compounded annually at $5\%$ , in what year does $1{,}000$ dollars first exceed $1{,}200$ dollars? Use $1.05^3 = 1.157625$ and $1.05^4 = 1.215506$ .

Answer choices for question 12 A year $3$ B year $4$ C year $5$ D year $2$

← Back to lesson