# COMPOUND INTEREST WORD PROBLEMS WORKSHEET

Problem 1 :

You invest \$2,000 into an account that pays 4% interest and is compounded monthly.

a. Write a model that represents this situation.

b. Using your model from part a, how much money will be in the account after 5 years? After 20 years?

Solution

Problem 2 :

Samantha just won an AAFES sweepstake and has been given \$1,000,000!!! The only catch is she is not allowed to spend any of it for 15 years, but she is allowed to invest it. She found certificate of Deposit account that will pay her 5.25% annual interest compounded daily.

a. Write a model that represents this situation.

b. Using the model to help, calculate how much interest she gained during those 15 years.

Write a model for each scenario and use the model to calculate the balance for the given number of years.

Solution

Problem 3 :

You deposit \$500 in an account that pays 8% annual interest compounded monthly. How much will you have after 15 years?

Solution

Problem 4 :

You deposit \$575 in an account that pays 4% annual interest compounded continuously. How much will you have after 5 years?

Solution

Problem 5 :

You deposit \$3,000 in an account that pays 3.28% annual interest. Find the balance after 5 years if the interest is compounded semi-annually. How much would you have if the interest was compounded daily for five years?

Solution

Problem 6 :

Jasmine invests \$2,658 in a retirement account with a fixed annual interest rate of 9% compounded continuously. What will the account balance be after 15 years?

Solution

Problem 7 :

Maria invests \$6,154 in a savings account with a fixed annual interest rate of 8% compounded continuously. What will the account balance be after 10 years?

Solution

Problem 8 :

Ryan invests a sum of money in a savings account with a fixed annual interest rate of 4.31% compounded 12 times per year. After 10 years, the balance reaches \$12,855.94. What was the amount of the initial investment?

Solution

Problem 9 :

Ndiba invests a sum of money in a savings account with a fixed annual interest rate of 4.61% compounded 3 times per year. After 6 years, the balance reaches \$5,485.85. What was the amount of the initial investment?

Solution

1)  a)  A = 2000 (1 + 0.04/12)12t

b)  A(5= \$2393.78

c)  A(20= \$4104.44

2)  a)  1142300     b)  142300

3)  A = \$1653.46

4)  A = \$699.575

5)  A = \$3529.94

6) the value of account balance after 15 years is approximately \$10,253.

7)  The balance be after 10 years is \$13663

8)  initial investment = \$8570.62.

9) Amount of initial investment  = \$4168.99

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