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Year 12 Simple and Compound Interest Worksheet — Level 3 — Practice Set 4 — 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 4 — Answers

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

1.Compare $3,000.00 invested for 2 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: $4.80

  1. Simple: I = $3,000.00 × 0.04 × 2 = $240.00
  2. Compound: A = $3,000.00 × 1.042 ≈ $3,244.80, so interest ≈ $244.80
  3. Difference = $244.80 − $240.00 = $4.80
2.$1,250.00 is invested at 2.5% per year, compounded yearly, for 6 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $1,449.62; interest $199.62

  1. A = P(1 + r)n = $1,250.00 × (1 + 0.025)6
  2. = $1,250.00 × 1.159693
  3. ≈ $1,449.62
  4. Interest = $1,449.62 − $1,250.00 = $199.62
3.$12,000.00 is invested at 3% per year, compounded yearly, for 3 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $13,112.72; interest $1,112.72

  1. A = P(1 + r)n = $12,000.00 × (1 + 0.03)3
  2. = $12,000.00 × 1.092727
  3. ≈ $13,112.72
  4. Interest = $13,112.72 − $12,000.00 = $1,112.72
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.$6,000.00 is invested at 2% per year, compounded yearly, for 10 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $7,313.97; interest $1,313.97

  1. A = P(1 + r)n = $6,000.00 × (1 + 0.02)10
  2. = $6,000.00 × 1.218994
  3. ≈ $7,313.97
  4. Interest = $7,313.97 − $6,000.00 = $1,313.97
6.Compare $3,250.00 invested for 7 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: $44.48

  1. Simple: I = $3,250.00 × 0.025 × 7 = $568.75
  2. Compound: A = $3,250.00 × 1.0257 ≈ $3,863.23, so interest ≈ $613.23
  3. Difference = $613.23 − $568.75 = $44.48
7.Compare $15,000.00 invested for 10 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: $658.75

  1. Simple: I = $15,000.00 × 0.03 × 10 = $4,500.00
  2. Compound: A = $15,000.00 × 1.0310 ≈ $20,158.75, so interest ≈ $5,158.75
  3. Difference = $5,158.75 − $4,500.00 = $658.75
8.Compare $8,000.00 invested for 2 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: $12.80

  1. Simple: I = $8,000.00 × 0.04 × 2 = $640.00
  2. Compound: A = $8,000.00 × 1.042 ≈ $8,652.80, so interest ≈ $652.80
  3. Difference = $652.80 − $640.00 = $12.80
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