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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 $7,250.00 invested for 7 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: $62.97

  1. Simple: I = $7,250.00 × 0.02 × 7 = $1,015.00
  2. Compound: A = $7,250.00 × 1.027 ≈ $8,327.97, so interest ≈ $1,077.97
  3. Difference = $1,077.97 − $1,015.00 = $62.97
2.Compare $13,750.00 invested for 4 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: $75.75

  1. Simple: I = $13,750.00 × 0.03 × 4 = $1,650.00
  2. Compound: A = $13,750.00 × 1.034 ≈ $15,475.75, so interest ≈ $1,725.75
  3. Difference = $1,725.75 − $1,650.00 = $75.75
3.Compare $8,500.00 invested for 8 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: $527.86

  1. Simple: I = $8,500.00 × 0.045 × 8 = $3,060.00
  2. Compound: A = $8,500.00 × 1.0458 ≈ $12,087.86, so interest ≈ $3,587.86
  3. Difference = $3,587.86 − $3,060.00 = $527.86
4.Compare $3,500.00 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: $91.99

  1. Simple: I = $3,500.00 × 0.05 × 5 = $875.00
  2. Compound: A = $3,500.00 × 1.055 ≈ $4,466.99, so interest ≈ $966.99
  3. Difference = $966.99 − $875.00 = $91.99
5.$14,750.00 is invested at 6% per year, compounded yearly, for 8 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $23,509.26; interest $8,759.26

  1. A = P(1 + r)n = $14,750.00 × (1 + 0.06)8
  2. = $14,750.00 × 1.593848
  3. ≈ $23,509.26
  4. Interest = $23,509.26 − $14,750.00 = $8,759.26
6.$14,250.00 is invested at 3% per year, compounded yearly, for 9 years. Find the final amount and the interest earned, to the nearest cent.

Answer: Amount $18,593.02; interest $4,343.02

  1. A = P(1 + r)n = $14,250.00 × (1 + 0.03)9
  2. = $14,250.00 × 1.304773
  3. ≈ $18,593.02
  4. Interest = $18,593.02 − $14,250.00 = $4,343.02
7.Compare $3,750.00 invested for 10 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: $300.92

  1. Simple: I = $3,750.00 × 0.04 × 10 = $1,500.00
  2. Compound: A = $3,750.00 × 1.0410 ≈ $5,550.92, so interest ≈ $1,800.92
  3. Difference = $1,800.92 − $1,500.00 = $300.92
8.Compare $4,500.00 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: $463.36

  1. Simple: I = $4,500.00 × 0.045 × 10 = $2,025.00
  2. Compound: A = $4,500.00 × 1.04510 ≈ $6,988.36, so interest ≈ $2,488.36
  3. Difference = $2,488.36 − $2,025.00 = $463.36
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