Investing

Question 1

Sally’s parents deposited $15,000 into a college savings account on her third birthday. The account had an interest rate of 9.6% compounded annually. They were hoping that the money would double twice by the time she was 18 years old. Using the rule of 72, will their hopes come true?

Revolt · Accepted Answer

Yes, the $15,000 will double each 7.5 years. In 15 years, it will double twice.

Question 2

Jaina and Tomas compare their compound interest accounts to see how much they will have in the accounts after three years. They substitute their values shown below into the compound interest formula.Compound Interest AccountsNamePrincipalInterest RateNumber of YearsCompoundedJaina$3007%3Once a yearTomas$4004%3Once a yearWhich pair of equations would correctly calculate their compound interests?

Revolt · Accepted Answer

Jaina: , Tomas:

Question 3

Uta invests $345 into a simple interest investment account that pays interest at a rate of 9% a year. After several years, she withdraws her balance of $531.30. Using the formula , how many years was her money invested?

Revolt · Accepted Answer

6 years

Question 4

Herky and Elaina want to compare their investment accounts to see how much they will have in the accounts after eight years. They substitute their values shown below into the compound interest formula.Compound Interest AccountsNamePrincipalInterest RateNumber of YearsCompoundedHerky$5005%8Once a yearElaina$4006%8Once a yearWhich pair of equations would correctly calculate their compound interests?

Revolt · Accepted Answer

Herky: , Elaina:

Question 5

Uta invests an amount into a compound interest investment account that pays 6% a year. After six years, she withdraws her total balance of $500. Using the formula , how much money did Uta initially invest?

Revolt · Accepted Answer

$352.48

Question 6

To save for a car when he turns 18, Pascale deposited $500 each year into a savings account with a 7.5% interest rate compounded annually.YearBeginning BalanceInterest EarnedEnding Balance1$500.00$37.50$537.502$1,037.50$77.81$1,115.313$1,615.31$121.15$1,736.464$2,236.46$167.73$2,404.195 Using the formula , what is the value of the account at the end of the fifth year?

Revolt · Accepted Answer

$3,122.00

Question 7

Veronique and Lily compare their investment accounts to see how much they will have in the accounts after seven years. They substitute their values shown below into the compound interest formula.Compound Interest AccountsNamePrincipalInterest RateNumber of YearsCompoundedVeronique$1,0005%7Once a yearLily$1,8009%7Once a yearWhich pair of equations would correctly calculate their compound interests?

Revolt · Accepted Answer

Veronique: , Lily:

Question 8

Sylvia invested $500 in an account compounded annually with an interest rate of 8%. Manuel invested $600 in an account with a compound interest rate of 7.25%. Using the rule of 72, , who will double their money first?

Revolt · Accepted Answer

Sylvia will double her money first, in approximately 9 years.

Question 9

Which descriptions about simple interest and yearly compounded interest are true? Select four options.

Revolt · Accepted Answer

Only compound interest has an exponent in its formula.; Compound interest earns more money than simple interest at the same rate for the same amount of time.; Simple interest is only earned on the original principal investment.; Compound interest is earned on principal and interest.

Investing Answers

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