﻿ Simple and Compound Interest Worksheet | Problems & Solutions

# Simple and Compound Interest Worksheet

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 I = ptr, where I is the simple interest, p is the principal, t is the time in years and r is the interest rate per year. The rate of interest is 2% = 2 / 100. [Divide the interest rate by 100.] I = (2800 × 5 × 2100) [Substitute 2800 for p, 5 for t and 2 / 100 for r.] 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 r, compounded semiannually is 0.04 / 2= 0.020 . The number of payment periods t is 2 years x 2 interest periods = 4. The formula used to calculate the balance is B = p (1 + r)t , where B is the final balance, p is the principal, r is the rate of interest and t is the number of interest periods. = 818(1 + 0.020)4 [Substitute 818 for p, 0.020 for r and 4 for 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

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 = p × t × r
[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 = p x r x 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 x r x 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

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 = p × r × t
[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 $1\frac{1}{2}$% simple interest.
 a. $10610 b.$10605 c. $10600 d. None of the above #### Solution: Interest = p × r × t [Use the simple interest formula.] = 10000 × 3200 × 4 [Substitute 3 / 200 for 11 / 2%.] =$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 = p x (1 + r)t
[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 = 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.]

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 = p x r x 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.] 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 years t = 6 + 4 = 10 years.

Interest = p x r x 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.

Correct answer : (4)

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