Lesson 116: Solving Simple and Compound Interest Problems — Practice Questions

1. 1. A principal of 5,000 dollars is invested at a simple interest rate of 2% per year. What is the total amount in the account after 10 years? ___ dollars

2. 2. Liam invests 4,000 dollars in an account that pays 5% simple interest. What is the total value of his investment after 7 years?

   • A. $1,400
   • B. $5,400
   • C. $4,140
   • D. $140,000

3. 3. David invests 1,200 dollars in a savings account with a simple annual interest rate of 6%. How much interest will he earn after 4 years? ___ dollars

4. 4. Which expression correctly sets up the calculation for the simple interest ($I$) earned on 3,500 dollars at a rate of 4% for 6 years?

   • A. $I = 3500 \cdot 4 \cdot 6$
   • B. $I = 3500 + 0.04 \cdot 6$
   • C. $I = 3500(1.04)^6$
   • D. $I = 3500 \cdot 0.04 \cdot 6$

5. 5. Sarah deposits 2,500 dollars into an account earning 4% simple interest annually. What will the total amount in her account be after 5 years? ___ dollars

6. 6. An account earning simple interest exhibits linear growth, while an account earning compound interest exhibits exponential growth. Which statement best describes the interest earned each year for both types?

   • A. Simple interest earns a constant amount; compound interest earns an increasing amount.
   • B. Simple interest earns an increasing amount; compound interest earns a constant amount.
   • C. Both earn a constant amount of interest each year.
   • D. Both earn an increasing amount of interest each year.

7. 7. Michael invests 10,000 dollars at a 4% annual rate. After 2 years, how much more money will he have with annual compounding compared to simple interest? The difference is ___ dollars.

8. 8. You invest 500 dollars in an account with 8% interest compounded annually. How much interest, in dollars, will you earn specifically during the second year? You will earn ___ dollars.

9. 9. To solve the system of equations below by eliminating the $x$ variable, what is the most efficient first step? $4x + 3y = 8$ $2x + 5y = 12$

   • A. Add the two equations together.
   • B. Multiply the first equation by 2.
   • C. Multiply the second equation by -2.
   • D. Multiply the first equation by 5 and the second by 3.

10. 10. Solve the system of equations: $2x + 3y = 12$ $5x - 2y = 11$ The value of $x$ is ___.