PRACTICE PROBLEMS ON COMPOND INTEREST

Problem 1 :

a) What will an investment of $3000 at 10% p.a. Compound interest amount to after 3 years?

b) What part of this is interest?

Solution

Problem 2 :

How much compound interest is earned by investing $20,000 for 4 years at 12% p.a.?

Solution

Problem 3 :

$5000 is invested for 2 years at 10% p.a. What will this investment amount to if the interest is calculated as :

a) Simple interest

b) Compound interest?

Solution

Problem 4 :

a) What will an investment of $30,000 at 10% p.a. Compound interest amount to after 4 years?

b) What part of this is interest?

Solution

Problem 5 :

How much compound interest is earned by investing €80,000 at 9% p.a. over a 3 year period?

Solution

Problem 6 :

$6000 is invested for 2 years at 15% p.a. What will this investment amount to if the interest is calculated as :

a) Simple interest

b) Compound interest?

Solution

Problem 7 :

Calculate :

a) The simple interest earned on $2000 at 5% p.a. for 3 years.

b) Find the compound interest earned on $2000 at 5% p.a. for 3 years.

Solution

Problem 8 :

If $50,000 is invested at 9% p.a. compound interest, use a table to find:

a) The final amount after 2 years.

b) How much interest was earned in the 2 year period.

Solution

Problem 9 :

Determine the interest earned for the following investments 

a. $4000 at 8% p.a. compound interest for 2 years.

b. $12000 at 6% p.a. compound interest for 3 years.

c. $500 at 3% p.a. compound interest for 3 years.

Solution