Compound Interest Finding the Year or Percent

The interest from the previous year also earns interest, which of the following describes the statement?

• simple

• rate

• compound

• time

What interest is computed on the principal and also on the accumulated past interests?

• simple

• compound

• annuity due

• ordinary Annuity

The interest resulting from the periodic addition of simple interest to the principal.

• accumulation

• discounting

• simple interest

• compound interest

To earn as much interest as possible, you should open a savings account that earns ______ interest and has the _____ interest rate.

• compound; lowest

• simple ; lowest

• compound ; highest

• simple ; highest

Derrick has $1,000 in a savings account that ears 15% interest, compounded monthly. To the nearest cent, how much will he have in 2 years? (Use the formula on the screen. There are 12 months in a year.)

• $5,350.25

• $1,322.50

• $1,025.16

• $1,347.35

• A

• B

• C

• D

• £1664

• £1856

• £1799.78

• £1871.77

• 34207.03

• 29240.00

• 36259.78

• 30260.25

Label each part of the formula

b

a

c

d

e

End Amount

Principle

Compound Period

Rate

Time

What does the P stand for in this formula?

• Initial amount

• Final amount

• Rate

• Time

• The number of times compounded per year