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Year 12 Simple and Compound Interest Worksheet — Level 3 — Answers

Answer sheet with worked solutions for the Year 12 financial mathematics worksheet.

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Success TutoringWorksheetsAnswer sheetYear 12 · Mathematics · Financial Mathematics

Year 12 Simple and Compound Interest Worksheet — Level 3 — Answers

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

1.$1,000.00 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 $1,194.05; interest $194.05

  1. A = P(1 + r)n = $1,000.00 × (1 + 0.03)6
  2. = $1,000.00 × 1.194052
  3. ≈ $1,194.05
  4. Interest = $1,194.05 − $1,000.00 = $194.05
2.Compare $15,000.00 invested for 10 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: $1,544.54

  1. Simple: I = $15,000.00 × 0.045 × 10 = $6,750.00
  2. Compound: A = $15,000.00 × 1.04510 ≈ $23,294.54, so interest ≈ $8,294.54
  3. Difference = $8,294.54 − $6,750.00 = $1,544.54
3.Compare $5,750.00 invested for 6 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: $80.80

  1. Simple: I = $5,750.00 × 0.03 × 6 = $1,035.00
  2. Compound: A = $5,750.00 × 1.036 ≈ $6,865.80, so interest ≈ $1,115.80
  3. Difference = $1,115.80 − $1,035.00 = $80.80
4.$9,750.00 is invested at 2% per year, compounded yearly, for 4 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $10,553.71; interest $803.71

  1. A = P(1 + r)n = $9,750.00 × (1 + 0.02)4
  2. = $9,750.00 × 1.082432
  3. ≈ $10,553.71
  4. Interest = $10,553.71 − $9,750.00 = $803.71
5.$10,750.00 is invested at 5% per year, compounded yearly, for 2 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $11,851.88; interest $1,101.88

  1. A = P(1 + r)n = $10,750.00 × (1 + 0.05)2
  2. = $10,750.00 × 1.1025
  3. ≈ $11,851.88
  4. Interest = $11,851.88 − $10,750.00 = $1,101.88
6.$2,000.00 is invested at 2.5% per year, compounded yearly, for 4 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $2,207.63; interest $207.63

  1. A = P(1 + r)n = $2,000.00 × (1 + 0.025)4
  2. = $2,000.00 × 1.103813
  3. ≈ $2,207.63
  4. Interest = $2,207.63 − $2,000.00 = $207.63
7.Compare $8,500.00 invested for 9 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: $538.15

  1. Simple: I = $8,500.00 × 0.04 × 9 = $3,060.00
  2. Compound: A = $8,500.00 × 1.049 ≈ $12,098.15, so interest ≈ $3,598.15
  3. Difference = $3,598.15 − $3,060.00 = $538.15
8.$3,750.00 is invested at 3% per year, compounded yearly, for 2 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $3,978.38; interest $228.38

  1. A = P(1 + r)n = $3,750.00 × (1 + 0.03)2
  2. = $3,750.00 × 1.0609
  3. ≈ $3,978.38
  4. Interest = $3,978.38 − $3,750.00 = $228.38
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