Comparing Simple And Compound Interest Question Preview (ID: 59224)


Practice Comparing Simple And Compound Interest. TEACHERS: click here for quick copy question ID numbers.

A customer will borrow $12,000 to buy a car. Which loan option would allow the customer to pay the least amount of interest?
a) 4-year loan with a 5.2% annual simple interest rate
b) 5-year loan with a 4.2% annual simple interest rate
c) 6-year loan with a 4.7% annual simple interest rate
d) 3-year loan with a 8.4% annual simple interest rate

Henry took out a 4-year loan for $5,000 and paid 4.2% annual simple interest. Ingrid took out a 6-year loan for $5,000 and paid 3.9% annual simple interest. What is the difference between the amounts of interest Henry and Ingrid paid for their loans?
a) $417
b) $150
c) $60
d) $330

A students' parents invested $5,000 in a college savings account that pays 4.85% annual simple interest. Which amount is closest to the interest earned on the account at the end of 15 years?
a) $5,174.11
b) $10,174.11
c) $3637.50
d) $8637.50

An employee put $5,000 in a retirement account that offers 9% interest compounded annually. Which amount is closest to the interest the employee will have earned at the end of 5 years?
a) $450.00
b) $229.09
c) $2,250.00
d) $2693.12

Mr. Flores opened an account with a deposit of $5,000. The account earned annual simple interest and at the end of 4 years, the balance of the account was $6,500. What is the annual interest rate on this account?
a) 5.8%
b) 7.5%
c) 3.3%
d) 1.9%

Mr. Wilkins deposited $2,500 in a new account at his bank. The bank pays 6.5% interest compounded annually on this account. Which amount is closest to the balance of the account at the end of 2 years?
a) $2,835.56
b) $2,513.00
c) $2,662.50
d) $2,825.00

May deposits $2,500 into each of two savings accounts. Account I earns 4% annual simple interest and Account II earns 4% interest compounded annually. What is the sum of balances of Account I and Account II at the end of 3 years?
a) $5,600.00
b) $5,612.16
c) $5,624.32
d) $5,200.00

Paul deposits $1,750 into each of two savings accounts. Account I earns 2.75% annual simple interest and Account II earns 2.75% interest compounded annually. Which amount is closest to the difference between the interest Paul will earn in 2 years?
a) $96.25
b) $1.32
c) $97.57
d) $193.82

Holly is taking out a loan in the amount of $10,000. Her choices for the loan are a 4-year loan at 4% simple interest and a 6-year loan at 5% simple interest. What is the difference in the amount of interest Holly will have to pay for each loan?
a) $1,600
b) $3,000
c) $4,600
d) $1,400

Clarissa need a $2,500 loan in order to buy a car. Which loan option would allow her to pay the least amount of interest?
a) An 18-MONTH loan with a 4.75% annual simple interest rate
b) A 30-MONTH loan with a 4.00% annual simple interest rate
c) A 24-MONTH loan with a 4.25% annual simple interest rate
d) A 36-MONTH loan with a 4.50% annual simple interest rate

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