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Q:

If you deposit $5000 into an account paying 6% annual interest compounded monthly, how long until there is $8000 in the account?

A) 6.9	B) 7.9
C) 8.9	D) 9.9

Answer & Explanation Answer: B) 7.9

Explanation:

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

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Q:

How much money would you need to deposit today at 9% annual interest compounded monthly to have $12000 in the account after 6 years?

A) 9007	B) 4007
C) 7007.08	D) 8oo7

Answer & Explanation Answer: C) 7007.08

Explanation:

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

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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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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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Q:

If there is a total of 104 weekly instalments and a third deposit, find: the total cost of the computer

A) 3932.55	B) 4932
C) 5932	D) 6932

Answer & Explanation Answer: A) 3932.55

Explanation:

Total cost = deposit + loan + interest
= 1231.67 + 2463.33 + 237.55
= $3932.55

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Q:

If there is a total of 104 weekly instalments and a third deposit, find the interest rate

A) 2.82	B) 3.82
C) 4.82	D) 5.82

Answer & Explanation Answer: C) 4.82

Explanation:

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

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Q:

If there is a total of 104 weekly instalments and a thirddeposit, find the interest charged

A) 237.55	B) 337
C) 443	D) 334

Answer & Explanation Answer: A) 237.55

Explanation:

Cash price = $3695

Deposit =1/3 of $3695 = $1231.67

Loan amount = $3695.00 − $1231.67 = $2463.33

Total cost of loan = $25.97 × 104= $2700.88

Interest charged = total amount − loan
I = A − P
= 2700.88 − 2463.33
= 237.55

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Filed Under: Simple Interest
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