Interest Quiz Study Guide
On this quiz, you will have access to your Simple & Compound Interest Guided Notes
worksheets, so it is in your best interest to ensure they are accurate and complete. The
quiz assesses comprehension of vocabulary terms, including interest, simple interest,
compound interest, principal, interest rate, etc., and requires you to compute interest
earned or owed with given scenarios and formulas.
The quiz will be given on these dates:
Block 1 = Thursday, April 2
Block 6 = Wednesday, April 1
Here are some example problems to help you prepare. The answer key is on the next
page.
Simple Interest
I = P*R*T
1. How much interest will you owe on a $5,000 loan with a 15% interest rate after 2
years?
2. How much interest will you earn on a $500 savings account with 2% interest after
10 years?
Compound Interest
A = P[1 + (r/n)]nt
3. How much interest will you owe on a $5,000 loan with a 15% interest rate after 2
years with interest compounded monthly?
4. How much will you earn on a $500 CD with a 2% interest rate after 10 years, with
interest compounded quarterly?
Critical Thinking
5. Why would you want compounding interest on savings, but not on loans?
Simple Interest
I = P*R*T
1. How much interest will you owe on a $5,000 loan with a 15% interest rate after 2
years?
I = PRT
I = 5,000*.15*2
I = $1,500
You will owe $1,500 in interest.
2. How much interest will you earn on a $500 savings account with 2% interest after
10 years?
I = PRT
I = 500*.02*10
I = $100
You will earn $100 in interest.
Compound Interest
A = P[1 + (r/n)]nt
3. How much interest will you owe on a $5,000 loan with a 15% interest rate after 2
years with interest compounded monthly?
A = 5,000[1 + (.15/12)]12*2
A = $6,736.76
I=A–P
I = 6,736.76 – 5,000
I = $1,736.76
You will owe $1,736.76 in interest.
4. How much will you earn on a $500 CD with a 2% interest rate after 10 years, with
interest compounded quarterly?
A = 500 [1 + .02/4]4*10
A = 500 [ 1 + .005]40
A = 610.40
I=A–P
I = 610.40 – 500
I = 110.40
You will earn $110.40 in interest.
Critical Thinking
5. Why would you want compounding interest on savings, but not on loans?
You want compounding interest on savings because then you’ll earn more
money. Adversely, you do not want compounding interest on loans because you
will owe more and more money.