Simple & Compound Interest, Growth & Decay Quiz
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5 questions, one answer each
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1. What formula is used for compound growth or decay?
- A. A = P + rn
- B. A = Prn/100
- C. A = P(1 ± r/100)ⁿ
- D. A = Pn(1 ± r)
2. £3000 is invested at 4% compound interest for 2 years. What is the total value?
- A. £3240
- B. £3244.80
- C. £3120
- D. £3249.60
3. A machine worth £6000 depreciates by 20% per year. What is it worth after 3 years?
- A. £3072
- B. £4800
- C. £3840
- D. £2400
4. Why does compound interest grow faster than simple interest over time?
- A. It uses a higher rate
- B. It is calculated on an increasing running total each period, not just the original amount
- C. It compounds only at the end
- D. It always uses a longer time period
5. A savings account pays 2.5% compound interest annually. Approximately how many years does it take for £1000 to first exceed £1100 (10% growth)?
- A. 2 years
- B. 4 years
- C. 6 years
- D. 10 years