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Q:

If you deposit $6500 into an account paying 8% annual interest compounded monthly, how
much money will be in the account after 7 years?

A) 11358.24	B) 12334
C) 15789	D) 12386

Answer & Explanation Answer: A) 11358.24

Explanation:

FV=P(1+r/n)^nt

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Filed Under: Compound Interest
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Q:

If you deposit $4000 into an account paying 6% annual interest compounded quarterly, how much money will be in the account after 5 years ?

A) 3387.42	B) 4387.42
C) 5387.42	D) 6387.42

Answer & Explanation Answer: C) 5387.42

Explanation:

The mathematical formula for calculating compound interest depends on several factors. These factors include the amount of money deposited called the principal, the annual interest rate (in decimal form), the number of times the money is compounded per year, and the number of years the money is left in the bank.

$F V = p {(1 + \frac{r}{n})}^{n t}$

FV = Future value of the Deposit

p = Principal or Amount of Money deposited

r = Annual Interest Rate (in decimal form )

n = No of times compounded per year

t = time in years

$F V = 4000 {[1 + \frac{0.06}{4}]}^{4 (5)}$ = 5387.42

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Q:

Jason decides to borrow money for a holiday. If a personal loan is taken over 4 years with equal quarterly repayments at 12% p.a. flat rate (simple interest), calculate the effective rate of interest.

A) 22,588	B) 32.588
C) 42.588	D) 43.588

Answer & Explanation Answer: A) 22,588

Explanation:

Flat rate = 12%
n = 4 × 4
= 16

Effective rate =2n/(n+1) × flat rate

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Filed Under: Simple Interest
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Q:

An investment bond is offered to the public at 9% p.a. Louise buys a bond worth $2000 that will mature in 2 years. How much in total will Louise receive at the end of the 2 years?

A) 3360	B) 2360
C) 4360	D) 5360

Answer & Explanation Answer: B) 2360

Explanation:

I = (P x r x t)/100

I = $360

A = P+I

A = 2360

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Filed Under: Simple Interest
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Q:

Townbank offers a term deposit account paying investors 12.5% p.a. simple interest on investments over $100 000 for 2 years or more. Peta decides to invest $150 000 in this account for 2 years. How much interest will Peta earn at the end of the investment?

A) 57500	B) 47500
C) 37500	D) 67500

Answer & Explanation Answer: C) 37500

Explanation:

I = (p x t x r)/100

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Q:

An amount of $255 was invested at 8.5% p.a. How long will it take, to the nearest year, to earn $86.70 in interest?

A) 2years	B) 3years
C) 4years	D) 5years

Answer & Explanation Answer: C) 4years

Explanation:

T = (100 x I)/ (P x r)

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Q:

A bank offers 9% p.a. simple interest on an investment. At the end of 4 years the interest earned was $215. How much was invested?

A) 597.22	B) 345
C) 456	D) 378

Answer & Explanation Answer: A) 597.22

Explanation:

I = (p x r x t)/100

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Q:

Jan invested $210 with a building society in a fixed deposit account that paid 8% p.a. simple interest for 18 months. How much did she receive after the 18 months?

A) 434	B) 345
C) 235.20	D) 233.20

Answer & Explanation Answer: C) 235.20

Explanation:

I = (p x r x t)/100

I = $25.20

A = P+I

A = 235.20

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Filed Under: Simple Interest
Exam Prep: Bank Exams
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