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

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

1.$5,750.00 is invested at 8% per year, compounded yearly, for 7 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $9,854.49; interest $4,104.49

  1. A = P(1 + r)n = $5,750.00 × (1 + 0.08)7
  2. = $5,750.00 × 1.713824
  3. ≈ $9,854.49
  4. Interest = $9,854.49 − $5,750.00 = $4,104.49
2.Compare $9,000.00 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: $10.87

  1. Simple: I = $9,000.00 × 0.02 × 3 = $540.00
  2. Compound: A = $9,000.00 × 1.023 ≈ $9,550.87, so interest ≈ $550.87
  3. Difference = $550.87 − $540.00 = $10.87
3.Compare $9,750.00 invested for 4 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: $219.15

  1. Simple: I = $9,750.00 × 0.06 × 4 = $2,340.00
  2. Compound: A = $9,750.00 × 1.064 ≈ $12,309.15, so interest ≈ $2,559.15
  3. Difference = $2,559.15 − $2,340.00 = $219.15
4.Compare $14,750.00 invested for 4 years at 5% per year as simple interest and as interest compounded yearly. How much more does compound interest earn, to the nearest cent?

Answer: $228.72

  1. Simple: I = $14,750.00 × 0.05 × 4 = $2,950.00
  2. Compound: A = $14,750.00 × 1.054 ≈ $17,928.72, so interest ≈ $3,178.72
  3. Difference = $3,178.72 − $2,950.00 = $228.72
5.Compare $2,750.00 invested for 3 years at 3% per year as simple interest and as interest compounded yearly. How much more does compound interest earn, to the nearest cent?

Answer: $7.50

  1. Simple: I = $2,750.00 × 0.03 × 3 = $247.50
  2. Compound: A = $2,750.00 × 1.033 ≈ $3,005.00, so interest ≈ $255.00
  3. Difference = $255.00 − $247.50 = $7.50
6.$8,750.00 is invested at 4% per year, compounded yearly, for 4 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $10,236.26; interest $1,486.26

  1. A = P(1 + r)n = $8,750.00 × (1 + 0.04)4
  2. = $8,750.00 × 1.169859
  3. ≈ $10,236.26
  4. Interest = $10,236.26 − $8,750.00 = $1,486.26
7.$9,250.00 is invested at 5% per year, compounded yearly, for 7 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $13,015.68; interest $3,765.68

  1. A = P(1 + r)n = $9,250.00 × (1 + 0.05)7
  2. = $9,250.00 × 1.4071
  3. ≈ $13,015.68
  4. Interest = $13,015.68 − $9,250.00 = $3,765.68
8.$7,500.00 is invested at 4% per year, compounded yearly, for 2 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $8,112.00; interest $612.00

  1. A = P(1 + r)n = $7,500.00 × (1 + 0.04)2
  2. = $7,500.00 × 1.0816
  3. ≈ $8,112.00
  4. Interest = $8,112.00 − $7,500.00 = $612.00
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