Financial Literacy Review

​ (a)   interest is earned on the ​principal only.

• Simple
• Compound

​ (a)   interest is earned on the principal plus any previous interest.

• Compound
• Simple

George invests $15,250 in an account that earns 3.75% annual simple interest. Assuming that he makes no additional deposits or withdrawals, how much interest will George earn after 48 months?

Note: This question deals with money, be sure your answer includes the number in the hundredth place.

Mathematical Equivalence

ON

Jessie is taking out a $32,000 personal loan. The monthly payments are based on the length of the term are shown below. Which is a true statement about Jessie's repayment of the loan.

3-year term monthly payment: $948

5-year term monthly payment: $592

• Jessie will pay about $116 less in interest if she chooses the 3-year term.

• Jessie will pay $1,392 less if she chooses the 5-year term.

• Jessie will pay $1,392 less if she chooses the 3-year term.

• Jessie will pay about the same amount of interest regardless of the term length.

You can build good credit by making your payments on time.

• True

• False

Credit cards can help you stay within your budget since you cannot spend more than what is in your linked bank account.

• True

• False

Laura borrows $14,500 to buy a car. Which loan option would Laura pay the least amount of interest?

• 3 years

  7% simple interest

• 4 years

  5% simple interest

• 5 years

  6% simple interest

• 6 years

  5.5% simple interest

Being financially responsible means that you only make the minimum payment on your credit card.

• True

• False

Being financially responsible means that you check your account balance before making purchases.

• True

• False

An investment of $650 is made into an account that earns 6.5% annual simple interest. What will be the balance after 15 years?

Note: This question deals with money, be sure your answer includes the number in the hundredth place.

Mathematical Equivalence

ON