Cogito
Consumer Math · Chapter 3 · Lesson 1
Simple and Compound Interest
Interest that earns interest.
12 problems · about 22 minutes · TEKS M.M.3.A
Figure — use these to answer the problems
Warm Up
Straightforward practice. Get the method working first.
5 problems$3000 at 5% simple for 2 years. Interest in dollars?
AnswerWhat makes compound interest different?
- It is computed on the balance, so interest earns interest.
- The rate is always higher.
$1000 at 6% simple for 2 years. Interest in dollars?
Answer$5000 at 4% simple for 3 years. Interest in dollars?
Answer$1000 at 10% compounded annually for 3 years. Balance in dollars?
Answer
Build It Up
The same ideas with more to keep track of.
3 problems$2000 at 50% compounded annually for 2 years. Balance in dollars?
Answer$1000 at 10% simple for 3 years. Balance in dollars?
AnswerWhich grows faster over 30 years? 1 simple, 2 compound.
Answer
Stretch Yourself
Mixed problems. Work out what kind of question it is before you start.
4 problemsSort each statement by which kind of interest it describes.
Write each item under the heading it belongs to: Computed on the original amount only · The same interest every year · Computed on the growing balance · Interest earns interest
Simple interest
Compound interest
$4000 at 5% simple for 4 years. Interest in dollars?
AnswerThe Simple Case
$2000 at 5% simple interest for 3 years. Interest earned, in dollars?
AnswerdollarsThe Compound Case
$1000 at 10% compounded annually for 2 years. Final balance in dollars?
Answerdollars