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Year 11 Simple and Compound Interest Worksheet — Level 3 — Practice Set 2 — Answers

Answer sheet with worked solutions for the Year 11 financial mathematics worksheet.

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Success TutoringWorksheetsAnswer sheetYear 11 · Mathematics · Financial Mathematics

Year 11 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.$13,750.00 is invested at 6% per year, compounded yearly, for 2 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $15,449.50; interest $1,699.50

  1. A = P(1 + r)n = $13,750.00 × (1 + 0.06)2
  2. = $13,750.00 × 1.1236
  3. ≈ $15,449.50
  4. Interest = $15,449.50 − $13,750.00 = $1,699.50
2.Compare $10,500.00 invested for 8 years at 4% per year as simple interest and as interest compounded yearly. How much more does compound interest earn, to the nearest cent?

Answer: $509.98

  1. Simple: I = $10,500.00 × 0.04 × 8 = $3,360.00
  2. Compound: A = $10,500.00 × 1.048 ≈ $14,369.98, so interest ≈ $3,869.98
  3. Difference = $3,869.98 − $3,360.00 = $509.98
3.$4,750.00 is invested at 6% per year, compounded yearly, for 5 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $6,356.57; interest $1,606.57

  1. A = P(1 + r)n = $4,750.00 × (1 + 0.06)5
  2. = $4,750.00 × 1.338226
  3. ≈ $6,356.57
  4. Interest = $6,356.57 − $4,750.00 = $1,606.57
4.$4,250.00 is invested at 4.5% per year, compounded yearly, for 4 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $5,068.20; interest $818.20

  1. A = P(1 + r)n = $4,250.00 × (1 + 0.045)4
  2. = $4,250.00 × 1.192519
  3. ≈ $5,068.20
  4. Interest = $5,068.20 − $4,250.00 = $818.20
5.$11,500.00 is invested at 4% per year, compounded yearly, for 3 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $12,935.94; interest $1,435.94

  1. A = P(1 + r)n = $11,500.00 × (1 + 0.04)3
  2. = $11,500.00 × 1.124864
  3. ≈ $12,935.94
  4. Interest = $12,935.94 − $11,500.00 = $1,435.94
6.Compare $9,250.00 invested for 8 years at 4% per year as simple interest and as interest compounded yearly. How much more does compound interest earn, to the nearest cent?

Answer: $449.26

  1. Simple: I = $9,250.00 × 0.04 × 8 = $2,960.00
  2. Compound: A = $9,250.00 × 1.048 ≈ $12,659.26, so interest ≈ $3,409.26
  3. Difference = $3,409.26 − $2,960.00 = $449.26
7.$7,000.00 is invested at 2% per year, compounded yearly, for 7 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $8,040.80; interest $1,040.80

  1. A = P(1 + r)n = $7,000.00 × (1 + 0.02)7
  2. = $7,000.00 × 1.148686
  3. ≈ $8,040.80
  4. Interest = $8,040.80 − $7,000.00 = $1,040.80
8.Compare $11,750.00 invested for 5 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: $75.30

  1. Simple: I = $11,750.00 × 0.025 × 5 = $1,468.75
  2. Compound: A = $11,750.00 × 1.0255 ≈ $13,294.05, so interest ≈ $1,544.05
  3. Difference = $1,544.05 − $1,468.75 = $75.30
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