Unit 4 Test Review

When using the Mathematical Modeling Cycle to help answer financial questions, what formula is used to model simple interest?

• A = P(1 + rt)

• A = P(1 + r/n)^(nt)

• I = Prt

• A = P(1 + r)^t

When using the Mathematical Modeling Cycle to help answer financial questions, what formula is used to model a future amount if interest is compounded quarterly?

• A = P(1 + r)^t

• A = P(1 + r/n)^(nt)

• A = P(1 + rt)

• P = A(1 + rt)

When using the Mathematical Modeling Cycle to help answer financial questions, what formula is used to model a future amount if interest is compounded continuously?

• A = Pe^(rt)

• A = P(1 +r)^t

• A = P(1 + r/n)^(nt)

When using the Mathematical Modeling Cycle to help answer financial questions, what formula is used to model the amount of interest earned if interest is compounded annually?

• A = P(1 + rt)

• A = Pe^(rt)

• A = P(1 + r/n)^(nt)

• A = P(1 + r)^t

Leah and Marty each opened a savings account with a deposit of $100. How much more did Leah receive than Marty after 3 years?

• $15.00

• $5.00

• $1.50

• $0.50

The rate for compounded interest needs to be in...

• a decimal.

• a variable form.

• percent form.

• What is rate?

An employee puts $5,000 in a retirement account that offers 9% interest compounded annually. The employee makes no additional deposits or withdrawals. Which amount is closest to the interest at the end of 5 years?

• $229.09

• $450.00

• $7,693.12

• $2,693.12

Emily would like to buy some new furniture for her home. She decides to buy the furniture on credit with 9.5% interest compounded quarterly. If she spent $7,400, how much total will she have paid after 8 years?

• $16,109.05

• $15,927.56

• $15,683.28

• $15,415.94

If $1,000 is invested at 16% interest, compounded continuously, for five years, what is the ending balance?

• $225.54

• $22,255.40

• $2,225.54

• $1,225.54

What is the value of n if the question asks you to compound daily?

• 12

• 1

• 365

• 4