Outcome C3: Determine the effects of compound interest on ...



Outcome C3: Determine the effects of compound interest on deposits made into savings accounts using technology.

Outcome C4: Explore the growth of savings based on a variety of investment strategies ranging in amounts and time frames using technology.

Step 1: Go to: Explore

Step 2: Go to: “Simple and Compound Interest” Gizmo

Step 3: Complete: Exploration Guide.

Step 4: Complete: 5 Assessment Questions from the site, (also below).

Assessment Questions:

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1. You invest $1000 in a 5-year savings bond that pays 8% annual interest on the principal. How much total interest will you have earned after 5 years? (Round your answer to the nearest dollar).

o [pic]A. $80

o [pic]B. $400

o [pic]C. $469

o [pic]D. $1469

2. You deposit $1000 in a bank account. The money earns 10% compound interest annually. After 2 years, what will the balance in the account be? (Assume you do not withdraw any money from the account.)

o [pic]A. $200

o [pic]B. $210

o [pic]C. $1200

o [pic]D. $1210

3. You pay for a $100 purchase using a credit card. The credit card company charges 15% interest every month on the unpaid balance. How much will you owe after 3 months, assuming you don't make any payments during this time? (Round your answer to the nearest dollar).

***COMPOUND INTEREST***

o [pic]A. $100

o [pic]B. $145

o [pic]C. $152

o [pic]D. $450

4. Which of the following will result in the greatest total interest? (Unless specified otherwise, assume the interest is calculated as simple interest.)

o [pic]A. A loan of $5000 for 5 years at a 7% annual interest rate

o [pic]B. A loan of $5000 for 10 years at a 7% annual interest rate

o [pic]C. A loan of $5000 for 5 years at a 14% annual interest rate

o [pic]D. A loan of $5000 for 5 years at a 14% annual compound interest rate

5. Find the amount of interest earned on $5,000 at 15% compounded annually for 10 years. (Round your answer to the nearest dollar.)

o [pic]A. $5,802

o [pic]B. $7,500

o [pic]C. $15,228

o [pic]D. $20,228

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