Additional practice set 1 · Challenge ← Back to lesson

Compound Interest: Additional Practice (Set 1)

12 multiple-choice questions, progressively harder.

Additional practice set 1 · Challenge 0 / 12 answered

Question 1 of 12

1
How much must you deposit now to have $5{,}000$ dollars in $2$ years at $6\%$ compounded annually? Use $1.06^2 = 1.1236$ .

Answer choices for question 1 A $4{,}400.00$ dollars B $4{,}449.98$ dollars C $5{,}300.00$ dollars D $4{,}717.60$ dollars
2
You invest $1{,}000$ dollars at $9\%$ compounded continuously for $1$ year. Using $e^{0.09} = 1.094174$ , what is the balance?

Answer choices for question 2 A $1{,}090.00$ dollars B $1{,}094.17$ dollars C $1{,}093.08$ dollars D $1{,}900.00$ dollars
3
You invest $5{,}000$ dollars at $6\%$ compounded annually for $3$ years. Using $1.06^3 = 1.191016$ , what is the balance?

Answer choices for question 3 A $5{,}900.00$ dollars B $5{,}950.00$ dollars C $5{,}955.08$ dollars D $6{,}000.00$ dollars
4
Compounded daily ( $n = 365$ ) versus continuously, on the same principal, rate, and time, the daily balance is:

Answer choices for question 4 A far above the continuous balance B just barely below the continuous balance C exactly zero D exactly double the continuous balance
5
You invest $2{,}500$ dollars at $4\%$ compounded quarterly for $2$ years. Using $1.01^8 = 1.082857$ , what is the balance?

Answer choices for question 5 A $2{,}700.00$ dollars B $2{,}704.00$ dollars C $2{,}706.00$ dollars D $2{,}707.14$ dollars
6
The step $\left(1 + \frac{r}{n}\right)^{nt} = \left[\left(1 + \frac{r}{n}\right)^{n}\right]^{t}$ relies on which exponent law?

Answer choices for question 6 A $b^{nt} = (b^n)^t$ , power of a power B $b^{m+n} = b^m b^n$ C $b^0 = 1$ D $b^{-n} = \frac{1}{b^n}$
7
On $1{,}000$ dollars at $10\%$ for $3$ years, how much more does annual compounding earn than simple interest? Use $1.10^3 = 1.331$ .

Answer choices for question 7 A $0$ dollars B $10$ dollars C $31$ dollars D $33.10$ dollars
8
You want $10{,}000$ dollars in $3$ years at $5\%$ compounded annually. How much must you deposit now? Use $1.05^3 = 1.157625$ .

Answer choices for question 8 A $8{,}638.38$ dollars B $8{,}500.00$ dollars C $8{,}700.00$ dollars D $11{,}576.25$ dollars
9
You invest $4{,}000$ dollars at $5\%$ compounded continuously for $2$ years. Using $e^{0.10} = 1.105171$ , what is the balance?

Answer choices for question 9 A $4{,}400.00$ dollars B $4{,}410.00$ dollars C $4{,}200.00$ dollars D $4{,}420.68$ dollars
10
You invest $6{,}000$ dollars at $8\%$ compounded semiannually for $1$ year. Using $1.04^2 = 1.0816$ , what is the balance?

Answer choices for question 10 A $6{,}489.60$ dollars B $6{,}480.00$ dollars C $6{,}490.00$ dollars D $6{,}499.20$ dollars
11
Compounded annually at $6\%$ , in what year does $1{,}000$ dollars first pass $1{,}500$ dollars? Use $1.06^6 = 1.418519$ and $1.06^7 = 1.503630$ .

Answer choices for question 11 A year $5$ B year $6$ C year $8$ D year $7$
12
You invest $1{,}000$ dollars at $5\%$ for $10$ years. Which earns more, compounded annually or simple interest, and by roughly how much? Use $1.05^{10} = 1.628895$ .

Answer choices for question 12 A simple, by about $129$ dollars B they are equal C compound, by about $129$ dollars D compound, by about $50$ dollars

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