MOF Chapter 3: Banking Services

Which equation should be used to answer the following question:

Maria invests $6,154 in a savings account with a fixed annual interest rate of 8% compounded continuously. What will the account balance be after 10 years?

• $I=prt$

• $A=P\left(1+\frac{r}{n}\right)^{nt}$

• $B=pe^{rt}$

Which equation should be used to answer the following question:

Ryan invests a sum of money in a savings account with a fixed annual interest rate of 4.31% compounded 12 times per year. After 10 years, the balance reaches $12,855.94. What was the amount of the initial investment?

• $I=prt$

• $A=P\left(1+\frac{r}{n}\right)^{nt}$

• $B=pe^{rt}$

Which equation should be used to answer the following question:

A bank is offering 2.5% simple interest on a savings account. If you deposit $5000, how much interest will you earn in one year? 

• $I=prt$

• $A=P\left(1+\frac{r}{n}\right)^{nt}$

• $B=pe^{rt}$

To buy a car, Jessica borrowed $15,000 for 3 years at an annual simple interest rate of 9%. What is the total amount that she will repay?

• $4,050

• $19,050

• $40,500

• $55,500

You invest $1,900 at 4% compounded semi-annually for 3 years. How much will your $1,900 be worth in 3 years?

• $2,128.00

• $2,139.71

• $2,142.24

• $5,673.37

TJ invested $4000 in a bond at a yearly rate of 2% simple interest. He earned $200 in interest. How long was the money invested?

• 3 months

• 2.5 years

• 4 years

• 8 years

A bank is offering a CD that pays 6% compounded continuously. How much interest would a deposit of $2000 earn over 8 years?

• $1,232.15

• $2,960.00

• $3,187.70

• $3,232.15

Bertha deposited $1000 into a retirement account when she was 18. How much interest will Bertha have earned on her investment after 50 years at a yearly simple interest rate of 7.5%?

• $42,521.08

• $4,750

• $3,750

• $1,350

You receive a $5000 gift which you want to invest for 3 years. Should you choose an investment paying 4.5% interest compounded monthly or one paying 4.25% interest compounded continuously?

• 4.5% interest compounded monthly

• 4.25% interest compounded continuously

A newborn child receives a $5000 gift towards a college education from her grandparents. How much will the gift be worth in 17 years, if it in invested at 7% compounded quarterly?

• $5,950

• $10,950

• $16,267.11

• $16,435.41