Simple and Compound Interest Quiz
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Questions and Answers

What is the formula to calculate simple interest?

  • A = P(1 + rt)
  • I = Prt (correct)
  • I = Pt
  • A = P + I

    • A person deposits $1000 in a savings account that earns 5% annual simple interest. How much will be the interest earned at the end of the first year?

  • $500
  • $20
  • $100
  • $50 (correct)

    • What is the difference between simple and compound interest?

  • Simple interest is calculated on the principal amount, while compound interest is calculated on the principal and interest. (correct)
  • Simple interest is calculated monthly, while compound interest is calculated annually.
  • Simple interest is calculated annually, while compound interest is calculated monthly.
  • Simple interest is calculated on the principal and interest, while compound interest is calculated on the principal amount.

    • A bank offers a 10% annual compound interest on a deposit of $5000. If the interest is compounded annually, how much will be the amount after 2 years?

    <p>$6300</p> Signup and view all the answers

    What is the effect of compounding frequency on the interest earned?

    <p>More frequent compounding results in more interest earned.</p> Signup and view all the answers

    If a ₱100,000 deposit earns a 5% annual simple interest, how much will be the total amount after 3 years?

    <p>₱117,500</p> Signup and view all the answers

    A 2-year investment of ₱50,000 earns a 10% annual compound interest. How much will be the interest earned during the first year?

    <p>₱5,000</p> Signup and view all the answers

    A bank account with a ₱20,000 principal earns a 6% annual compound interest. If the interest is compounded quarterly, what will be the total amount after 1 year?

    <p>₱22,120</p> Signup and view all the answers

    A savings account has a ₱15,000 principal and earns a 7% annual simple interest. How much will be the total amount after 5 years?

    <p>₱21,500</p> Signup and view all the answers

    A ₱30,000 investment earns a 9% annual compound interest. If the interest is compounded semiannually, what will be the total amount after 2 years?

    <p>₱37,872</p> Signup and view all the answers

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