Comparing Compound and Simple Interest Rates

Mai put $4250 in the bank at 4.4% interest compounded annually. How much was in her account after 7 years. Drag and drop values to complete an equation that could be used to solve for the amount in her account.

c

d

4.4

0.44

4250

0.044

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Kristina received $125 for her birthday. Her parents offered to pay her 3.5% simple interest per year if she would save it for 5 years. Drag and drop values to complete an equation that could be used to solve for the amount in her account.

e

b

0.35

3.5

125

0.035

5

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CCSS.6.EE.B.6

Ms. Blacarte plans to finance a boat for $20,000. Her loan options are to the side. Determine the total payback amount based on each of the loans.

• $23,020.45

• Loan 3

• $23,039.29

• Loan 4

• $24,333.06

• Loan 2

• $23,881.05

• Loan 1

Caiden earned $475 from mowing lawns last summer. He deposited this money in an account that pays an interest rate of 3.8% compounded annually. What will be his balance after 15 year?

• $827.52
• $831.10
• $839.45
• $846.80

What is the formula for simple interest?

• A=P(1+r)^t
• I=Prt
• I=P(1+r)t
• A=Prt

Determine what the variables mean in the simple and compound interest formulas.

• interest

• P

• time, in years

• r

• total amount accrued with interest

• I

• Principal or original amount

• t

• interest rate as decimal

• A

Ms. Wickizer needs to borrow $12,000 to finance a used car. Order the following loan options into Least Expensive Payback amount to Most Expensive Payback amount.

• 5 year loan w/ 4.2% simple interest

• A 6 year loan with 8.4% simple interest

• 4 year loan w/ 5.2% simple interest

• A 3 year loan w/ 8.4% simple interest

Steven is going to deposit $700 in an account that earns 4.8% interest compounded annually. His wife Linda will deposit $800 in an account that earns 7.7% simple interest each year.

They deposit the money on the same day and make no additional deposits or withdrawals from the accounts. Which account will have the most and by how much after 7 years?

• Linda by $431.20

• Steven by $540.71

• Linda by $259.29

• Steven by $331.85

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Which statement best describes the effect of investing small amounts of money regularly?

• Small amounts of money invested regularly will never equal the value of investing larger amounts of money irregularly.

• Small amounts of money invested regularly will never equal the value of investing one larger lump sum.

• • Small amounts of money invested regularly grow over time.

• Small amounts of money invested regularly decrease over time.

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CCSS.HSF.BF.A.2

Mr. Jones and Mr. Smith both plan to retire in 5 years. 

• - Mr. Jones has invested $250 per month in a 401K retirement account for 20 years.

• - Mr. Smith has invested $500 a month in a 401K retirement account for 10 years.

• - Mr. Jones and Mr. Smith invested in the same accounts yielding the same interest rate.

Which statement about the retirement investments of Mr. Jones and Mr. Smith is most likely to be true?

• • Mr. Smith will most likely have more money in his retirement account because he invested more money each month.

• Mr. Jones and Mr. Smith will have the same amount of money in their retirement accounts.

• Mr. Jones will most likely have more money in his retirement account because he invested regularly over a longer period of time.

• It is impossible to determine whether Mr. Jones or Mr. Smith will have more money in their retirement accounts

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CCSS.HSF.IF.C.9