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Year 10 Simple and Compound Interest Worksheet — Level 3 — Practice Set 2 — Answers

Answer sheet with worked solutions for the Year 10 financial mathematics worksheet.

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Success TutoringWorksheetsAnswer sheetYear 10 · Mathematics · Financial Mathematics

Year 10 Simple and Compound Interest Worksheet — Level 3 — Practice Set 2 — Answers

Show your working. Write the rate as a decimal (5% = 0.05). Round money to the nearest cent.

1.Compare $2,500.00 invested for 4 years at 4.5% per year as simple interest and as interest compounded yearly. How much more does compound interest earn, to the nearest cent?

Answer: $31.30

  1. Simple: I = $2,500.00 × 0.045 × 4 = $450.00
  2. Compound: A = $2,500.00 × 1.0454 ≈ $2,981.30, so interest ≈ $481.30
  3. Difference = $481.30 − $450.00 = $31.30
2.$11,750.00 is invested at 4% per year, compounded yearly, for 6 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $14,867.50; interest $3,117.50

  1. A = P(1 + r)n = $11,750.00 × (1 + 0.04)6
  2. = $11,750.00 × 1.265319
  3. ≈ $14,867.50
  4. Interest = $14,867.50 − $11,750.00 = $3,117.50
3.Compare $8,000.00 invested for 6 years at 6% per year as simple interest and as interest compounded yearly. How much more does compound interest earn, to the nearest cent?

Answer: $468.15

  1. Simple: I = $8,000.00 × 0.06 × 6 = $2,880.00
  2. Compound: A = $8,000.00 × 1.066 ≈ $11,348.15, so interest ≈ $3,348.15
  3. Difference = $3,348.15 − $2,880.00 = $468.15
4.Compare $8,750.00 invested for 2 years at 2.5% per year as simple interest and as interest compounded yearly. How much more does compound interest earn, to the nearest cent?

Answer: $5.47

  1. Simple: I = $8,750.00 × 0.025 × 2 = $437.50
  2. Compound: A = $8,750.00 × 1.0252 ≈ $9,192.97, so interest ≈ $442.97
  3. Difference = $442.97 − $437.50 = $5.47
5.Compare $7,000.00 invested for 8 years at 2.5% per year as simple interest and as interest compounded yearly. How much more does compound interest earn, to the nearest cent?

Answer: $128.82

  1. Simple: I = $7,000.00 × 0.025 × 8 = $1,400.00
  2. Compound: A = $7,000.00 × 1.0258 ≈ $8,528.82, so interest ≈ $1,528.82
  3. Difference = $1,528.82 − $1,400.00 = $128.82
6.Compare $2,000.00 invested for 4 years at 2.5% per year as simple interest and as interest compounded yearly. How much more does compound interest earn, to the nearest cent?

Answer: $7.63

  1. Simple: I = $2,000.00 × 0.025 × 4 = $200.00
  2. Compound: A = $2,000.00 × 1.0254 ≈ $2,207.63, so interest ≈ $207.63
  3. Difference = $207.63 − $200.00 = $7.63
7.$5,000.00 is invested at 8% per year, compounded yearly, for 6 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $7,934.37; interest $2,934.37

  1. A = P(1 + r)n = $5,000.00 × (1 + 0.08)6
  2. = $5,000.00 × 1.586874
  3. ≈ $7,934.37
  4. Interest = $7,934.37 − $5,000.00 = $2,934.37
8.Compare $3,500.00 invested for 3 years at 4.5% per year as simple interest and as interest compounded yearly. How much more does compound interest earn, to the nearest cent?

Answer: $21.58

  1. Simple: I = $3,500.00 × 0.045 × 3 = $472.50
  2. Compound: A = $3,500.00 × 1.0453 ≈ $3,994.08, so interest ≈ $494.08
  3. Difference = $494.08 − $472.50 = $21.58
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