3C Quiz #2: Compounding Interest

Which of the following represents the formula for calculating compounding interest?

• $I=\Pr t$

• $A=P\left(i\right)^n$

• $A=\left(1+i\right)^n$

• $A=\ P\left(1+i\right)^n$

If a savings account was giving you interest compounded 4 times a year, you would say the interest is being compounded...

• biweekly

• annually

• quarterly

• monthly

You get a credit card that charges you interest biweekly. How many times a year will you be getting charged interest?

• 26

• 24

• 365

• 12

You invest money in a savings account for 14 years which compounds quarterly. How many compounding periods are there over the course of the investment?

• 14

• 56

• 3.5

• 28

Determine the amount of the future value for the following scenario: $4000 invested at 5%, compounded semi-annually, for 10 years.

• 6515.58

• 6224.04

• 6409.80

• 6554.47

Determine the amount of the future value for the following scenario: $5500 invested at 6%, compounded monthly for 3 years.

• $6581.74

• $6550.59

• $1,118,000

• $23,800.98

If you deposit $10,000 into an account paying 9% annual interest compounded semi-annually, how much INTEREST will you have earned after 7 years?

• $18,280.39

• $8519.45

• $18,519.45

• $8280.39

Josie incurs a credit card debt of $3500. She is charged 18% interest, compounded quarterly, until she pays it back in 2.5 years. How much INTEREST (not total!!!!) has she paid, in dollars, by the end of the 2.5 years? Remember this is MONEY so your answer should be rounded to TWO decimal places. You do NOT need a dollar sign in your answer.