Compund Interest
Question 1
Distinguish between simple and compound interest.
Question 2
At what rate of interest would a principal of $16 000 accumulate to $20481.35 in 5 years
if the interest is compounded semi-annually?
Question 3
How long would it take $3 750 to double itself if it is invested at 8%p.a. compounded
quarterly?
Question 4
$25 960 is invested at 6%p.a. compounded monthly over five years. Determine the:
(a) future value of the investment
(b) interest earned on the investment
Question 5
How much should you invest now at 9%p.a. compounded semi-annually, it you wish to receive
$15 000 in 5 years?
Question 6
(a) Prepare a table showing the "interest earned" and the
"accumulated value" per year for 3 years for
the people below:
JOHN who invests $6 000 at 7.5%p.a. simple interest and
CATHY who invests $6 000 at 6%p.a. compounded semi-annually
(b) WHO IS BETTER OFF AND BY HOW MUCH?
