A prospective employer has offered

MAP4C Lesson 9 Assignment
In this assignment you are going to explore the characteristics of compound interest
Make sure you answer all questions in the spaces provided
Part A: Finding the Answer
In this section, you are going to use the formula for calculating compound interest to find the answer.
For each question, answer the question giving the clues that you used in determining your answer. You will be given two
marks – one mark for your correct clues and one mark for the correct answer.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. This graph shows the growth of an investment.
What is the initial value of the investment?
a. $2000 b. $2400 c. $2500 d. $3000
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C. 2500

____ 2. Kyle wants to save for a new motorcycle. He deposits $2500 in a special savings account earning 6.25%
interest per year, compounded semi-annually. How much money will he have at the end of three years?
a. $2998.66 b. $3006.93 c. $3011.21 d. $3014.11
____ 3. A bank is offering a special three-year investment certificate paying 3.25% per year, compounded monthly.
How much interest would you earn by the end of the three years if you deposited $1500 in the account?
a. $146.25 b. $151.05 c. $152.97 d. $153.40
____ 4. You have decided to buy a new plasma TV. To do so, you must use your credit card to pay $1500 of the
purchase price. The credit card company charges interest at a rate of 18.5% per year, compounded monthly.
How much interest will you have to pay when you pay off the loan in one year?
a. $277.50 b. $290.33 c. $302.28 d. $665.48
____ 5. You have to maintain a minimum balance of $750 in your savings account. The interest rate earned on your
savings is 3.75% per year, compounded monthly. What is the least amount of interest you earn over a two-
year period?
a. $28.61 b. $57.30 c. $57.85 d. $58.32
Page 2
Principal: 2500 Rate: 6.5 Compounding Period: 2 Number of
periods: 6
Amount: b. 3006.93
Principal: 1500 Rate: 3.25 Compounding Period: 12
Number of periods: 36
Amount: d. 153.40
Principal: 1500 Rate: 18.5 Compounding Period: 12 Num-
ber of periods: 12
Amount: c. 302.28
Principal: 750 Rate: 3.75 Compounding Period: 12 Num-
ber of periods: 24
Amount: d. 58.32