Comparing Simple & Compound Interest

A bank is offering 2.5% simple interest on a savings account.  If you deposit $5,000, how much interest will you earn in three years?

• $5375
• $375
• $37500
• $42500

A bank is offering 7% annual compound interest on a savings account.  If you deposit $1,500, what will be the total amount of money in your savings account after three years?

• $337.56
• $1837.56
• $31500
• $30000

The simple interest formula is I=Prt. The P represents the principal. The principal is ___________________.

• the amount of money borrowed or deposited

• the percent interest for his year

• the amount taxed

• the amount the bank owes you for being a customer at their bank

The rate is given as a percent (%).  Before using it in the simple interest formula, you must first convert it to a______.

• fraction
• decimal
• ratio
• dollar amount

Convert 18 months to years. 

• 18 Years
• 1.5 Years
• .18 Years
• You cannot change it to years.

The simple interest formula is I=Prt.  What does the t represent?

• Principle
• Interest
• Time, in hours
• Time, in years

Write the percent as a decimal. 
4.3%

• 4.3
• .43
• .043
• 4300

What does the "r" in the interest formula stand for?

• Principal
• Interest
• rate
• time

The Principal and Interest are always___________.

• fraction
• decimal
• percent
• money

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