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Year 12 Simple and Compound Interest Worksheet — Level 3 — Practice Set 2 — 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 — Practice Set 2 — Answers

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

1.Compare $6,500.00 invested for 5 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: $170.83

  1. Simple: I = $6,500.00 × 0.05 × 5 = $1,625.00
  2. Compound: A = $6,500.00 × 1.055 ≈ $8,295.83, so interest ≈ $1,795.83
  3. Difference = $1,795.83 − $1,625.00 = $170.83
2.$7,250.00 is invested at 3% per year, compounded yearly, for 10 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $9,743.39; interest $2,493.39

  1. A = P(1 + r)n = $7,250.00 × (1 + 0.03)10
  2. = $7,250.00 × 1.343916
  3. ≈ $9,743.39
  4. Interest = $9,743.39 − $7,250.00 = $2,493.39
3.Compare $1,250.00 invested for 2 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: $3.13

  1. Simple: I = $1,250.00 × 0.05 × 2 = $125.00
  2. Compound: A = $1,250.00 × 1.052 ≈ $1,378.13, so interest ≈ $128.13
  3. Difference = $128.13 − $125.00 = $3.13
4.$9,750.00 is invested at 5% per year, compounded yearly, for 3 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $11,286.84; interest $1,536.84

  1. A = P(1 + r)n = $9,750.00 × (1 + 0.05)3
  2. = $9,750.00 × 1.157625
  3. ≈ $11,286.84
  4. Interest = $11,286.84 − $9,750.00 = $1,536.84
5.Compare $7,250.00 invested for 4 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: $17.63

  1. Simple: I = $7,250.00 × 0.02 × 4 = $580.00
  2. Compound: A = $7,250.00 × 1.024 ≈ $7,847.63, so interest ≈ $597.63
  3. Difference = $597.63 − $580.00 = $17.63
6.$1,000.00 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 $1,081.60; interest $81.60

  1. A = P(1 + r)n = $1,000.00 × (1 + 0.04)2
  2. = $1,000.00 × 1.0816
  3. ≈ $1,081.60
  4. Interest = $1,081.60 − $1,000.00 = $81.60
7.$2,750.00 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 $3,217.11; interest $467.11

  1. A = P(1 + r)n = $2,750.00 × (1 + 0.04)4
  2. = $2,750.00 × 1.169859
  3. ≈ $3,217.11
  4. Interest = $3,217.11 − $2,750.00 = $467.11
8.$10,000.00 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 $10,816.00; interest $816.00

  1. A = P(1 + r)n = $10,000.00 × (1 + 0.04)2
  2. = $10,000.00 × 1.0816
  3. ≈ $10,816.00
  4. Interest = $10,816.00 − $10,000.00 = $816.00
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