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Year 11 Simple and Compound Interest Worksheet — Level 3 — Practice Set 4 — 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 4 — Answers

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

1.Compare $2,250.00 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: $41.41

  1. Simple: I = $2,250.00 × 0.025 × 8 = $450.00
  2. Compound: A = $2,250.00 × 1.0258 ≈ $2,741.41, so interest ≈ $491.41
  3. Difference = $491.41 − $450.00 = $41.41
2.$12,500.00 is invested at 6% per year, compounded yearly, for 4 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $15,780.96; interest $3,280.96

  1. A = P(1 + r)n = $12,500.00 × (1 + 0.06)4
  2. = $12,500.00 × 1.262477
  3. ≈ $15,780.96
  4. Interest = $15,780.96 − $12,500.00 = $3,280.96
3.$12,750.00 is invested at 4.5% per year, compounded yearly, for 5 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $15,888.82; interest $3,138.82

  1. A = P(1 + r)n = $12,750.00 × (1 + 0.045)5
  2. = $12,750.00 × 1.246182
  3. ≈ $15,888.82
  4. Interest = $15,888.82 − $12,750.00 = $3,138.82
4.Compare $3,500.00 invested for 6 years at 2% per year as simple interest and as interest compounded yearly. How much more does compound interest earn, to the nearest cent?

Answer: $21.57

  1. Simple: I = $3,500.00 × 0.02 × 6 = $420.00
  2. Compound: A = $3,500.00 × 1.026 ≈ $3,941.57, so interest ≈ $441.57
  3. Difference = $441.57 − $420.00 = $21.57
5.Compare $3,750.00 invested for 5 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: $79.43

  1. Simple: I = $3,750.00 × 0.045 × 5 = $843.75
  2. Compound: A = $3,750.00 × 1.0455 ≈ $4,673.18, so interest ≈ $923.18
  3. Difference = $923.18 − $843.75 = $79.43
6.$2,000.00 is invested at 2% per year, compounded yearly, for 2 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $2,080.80; interest $80.80

  1. A = P(1 + r)n = $2,000.00 × (1 + 0.02)2
  2. = $2,000.00 × 1.0404
  3. ≈ $2,080.80
  4. Interest = $2,080.80 − $2,000.00 = $80.80
7.$11,750.00 is invested at 3% per year, compounded yearly, for 6 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $14,030.11; interest $2,280.11

  1. A = P(1 + r)n = $11,750.00 × (1 + 0.03)6
  2. = $11,750.00 × 1.194052
  3. ≈ $14,030.11
  4. Interest = $14,030.11 − $11,750.00 = $2,280.11
8.Compare $5,250.00 invested for 3 years at 2% per year as simple interest and as interest compounded yearly. How much more does compound interest earn, to the nearest cent?

Answer: $6.34

  1. Simple: I = $5,250.00 × 0.02 × 3 = $315.00
  2. Compound: A = $5,250.00 × 1.023 ≈ $5,571.34, so interest ≈ $321.34
  3. Difference = $321.34 − $315.00 = $6.34
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