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Simple and Compound Interest Worksheet
Practice Problems
The formula used to calculate simple interest isI ptr I p t r
The rate of interest is 2% =2 100
[Divide the interest rate by 100.]
I 2 100
[Substitute 2800 forp t 2 100 r
280
[Simplify.]
The interest after 5 years is $280.
The interest rater 0.04 2
The number of payment periodst
The formula used to calculate the balance is B =p r t p r t
= 818(1 + 0.020)4
[Substitute 818 forp r t
= 818(1.020)4
[Add inside the grouping symbols.]
= 885.08
[Simplify and round to nearest cent.]
The balance after 2 years is about $885.08
p t r
[Use the simple interest formula.]
= 900 × 4 × 0.05
[Substitute 0.05 for 5%.]
= $180
Balance = Interest + Principal = $180 + $900 = $1080.
p r t
[Use the simple interest formula.]
= 300 x 0.03 x 1
[Substitute 0.03 for 3%.]
= $9
At the end of the first month Mrs. Olga owes 300 + 9 = $309
Interest at the end of the second month =p r t
[Use the simple interest formula.]
= 309 x 0.03 x 1
= $9.27
[Multiplying.]
The total amount Mrs. Olga owes after 2 months = 309 + 9.27 = $318.27
p r t
[Use the simple interest formula.]
= 200 × 0.05 × 3
[Substitute 0.05 for 5%.]
= $30
p r t
[Use the simple interest formula.]
= 10000 ×3 200
[Substitute3 200 1 1 2
= $600
[Simplify.]
Balance = Interest + Principal
= $600 + $10000 = $10600
[Substitute the values and simplify.]
p r t
[Use the compound interest formula.]
= 4200 x (1 + 0.05)3
[Substitute 0.05 for 5%.]
= 4200 x 1.16
[Simplify.]
= $4872
p r t
[Use the simple interest formula.]
= 8000 × 0.07 × 5 = $2800
[Substitute 0.07 for 7%.]
Balance = Principal + Interest
= $8000 + $2800 = $10800
[Substitute the values and add.]
p r t
[Use the simple interest formula.]
= 445 x 0.034 x 2 = $30.26
[Substitute 0.034 for 3.4% and simplify.]
Balance = Principal + Interest
= $445 + $30.26 = $475.26
[Substitute the values and add.]
t
Interest =p r t
[Use the simple interest formula.]
= 11000 x 0.084 x 10 = $9240
[Substitute 0.084 for 8.4% and simplify.]
Balance = Principal + Interest
= 11000 + 9240 = 20240
[Substitute the values and add.]
So, the balance in Mrs. Charlie's account after 6 years is $20240.
Simple and Compound Interest Worksheet
- Page 1
1.
Find the simple interest earned on $2800 deposited in a bank at 2% annual interest after 5 years.
| a. | $270 | ||
 | b. | $280 | |
| c. | $230 | ||
| d. | $305 |
Solution:
Simple interest is the interest paid only on the original deposit or the principal.The formula used to calculate simple interest is
The rate of interest is 2% =
[Divide the interest rate by 100.]
[Substitute 2800 for
280
[Simplify.]
The interest after 5 years is $280.
Correct answer : (2)
2.
Find the balance on a deposit of $818, earning 4% interest compounded semiannually for 2 years.
| a. | $885.08 | |
| b. | $985.08 | ||
| c. | $935.08 | ||
| d. | $785.08 |
Solution:
For calculating the interest semiannually we must divide the interest rate by the number of interest periods.The interest rate
The number of payment periods
The formula used to calculate the balance is B =
= 818(1 + 0.020)4
[Substitute 818 for
= 818(1.020)4
[Add inside the grouping symbols.]
= 885.08
[Simplify and round to nearest cent.]
The balance after 2 years is about $885.08
Correct answer : (1)
3.
Marissa deposited $900 in her savings account. The rate of simple interest is 5% per year. Find the balance at the end of 4 years.
| a. | $720 | ||
| b. | $1080 | |
| c. | $180 | ||
| d. | None of the above |
Solution:
Interest =[Use the simple interest formula.]
= 900 × 4 × 0.05
[Substitute 0.05 for 5%.]
= $180
Balance = Interest + Principal = $180 + $900 = $1080.
Correct answer : (2)
4.
Mrs. Olga did not pay her electricity bill of $300 for the month of July. An interest of 3% per month is charged on any unpaid bill. Find the total amount charged if Mrs. Olga pays the bill after 2 months.
| a. | $309 | ||
| b. | $318.27 | |
| c. | $309.27 | ||
| d. | None of the above |
Solution:
Interest at the end of first month =[Use the simple interest formula.]
= 300 x 0.03 x 1
[Substitute 0.03 for 3%.]
= $9
At the end of the first month Mrs. Olga owes 300 + 9 = $309
Interest at the end of the second month =
[Use the simple interest formula.]
= 309 x 0.03 x 1
= $9.27
[Multiplying.]
The total amount Mrs. Olga owes after 2 months = 309 + 9.27 = $318.27
Correct answer : (2)
5.
Find the simple interest for 3 years at a rate of 5% on $200.
| a. | $60 | ||
| b. | $90 | ||
| c. | $30 | |
| d. | None of the above |
Solution:
Interest =[Use the simple interest formula.]
= 200 × 0.05 × 3
[Substitute 0.05 for 5%.]
= $30
Correct answer : (3)
6.
Find the balance at the end of 4 years if $10000 is deposited at the rate of % simple interest.
| a. | $10610 | ||
| b. | $10605 | ||
| c. | $10600 | |
| d. | None of the above |
Solution:
Interest =[Use the simple interest formula.]
= 10000 ×
[Substitute
= $600
[Simplify.]
Balance = Interest + Principal
= $600 + $10000 = $10600
[Substitute the values and simplify.]
Correct answer : (3)
7.
A credit card company charges compound interest annually on any unpaid debts at 5%. Mr. Brian now has outstanding debt of $4200. What will be his outstanding debt 3 years from now?
| a. | $4922 | ||
| b. | $4822 | ||
| c. | $4852 | ||
| d. | $4872 |
Solution:
Balance =[Use the compound interest formula.]
= 4200 x (1 + 0.05)3
[Substitute 0.05 for 5%.]
= 4200 x 1.16
[Simplify.]
= $4872
Correct answer : (4)
8.
Mr. Jones deposited $8000 in a bank that pays a simple interest of 7% per year. Find the balance in his account at the end of 5 years .
| a. | $10800 | |
| b. | $10300 | ||
| c. | $10600 | ||
| d. | $9800 |
Solution:
Interest =[Use the simple interest formula.]
= 8000 × 0.07 × 5 = $2800
[Substitute 0.07 for 7%.]
Balance = Principal + Interest
= $8000 + $2800 = $10800
[Substitute the values and add.]
Correct answer : (1)
9.
Chris deposited $445 in an account at his school bank, where the rate of interest is 3.4% per year. Find the balance he withdraws at the end of 2 years, if he gets a simple interest.
| a. | $475.26 | |
| b. | $575.26 | ||
| c. | $425.26 | ||
| d. | $375.26 |
Solution:
Interest =[Use the simple interest formula.]
= 445 x 0.034 x 2 = $30.26
[Substitute 0.034 for 3.4% and simplify.]
Balance = Principal + Interest
= $445 + $30.26 = $475.26
[Substitute the values and add.]
Correct answer : (1)
10.
Find the balance in Mrs. Charlie's account after 6 years, if she had deposited $11000 in her account 4 years ago. The bank pays a simple interest of 8.4% annually.
| a. | $21240 | ||
| b. | $19240 | ||
| c. | $19740 | ||
| d. | $20240 |
Solution:
Total number of yearsInterest =
[Use the simple interest formula.]
= 11000 x 0.084 x 10 = $9240
[Substitute 0.084 for 8.4% and simplify.]
Balance = Principal + Interest
= 11000 + 9240 = 20240
[Substitute the values and add.]
So, the balance in Mrs. Charlie's account after 6 years is $20240.
Correct answer : (4)