Simple & Compound Interest, Growth & Decay Quiz
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5 questions, one answer each
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1. Find the simple interest on $600 at 6% per year for 3 years.
- A. $36
- B. $108
- C. $180
- D. $636
2. Which formula correctly calculates a compound interest total?
- A. P + (PRT/100)
- B. P(1+R/100)^n
- C. P x R x T
- D. P(1 - R/100)^n
3. A car worth $20,000 depreciates by 10% per year. What is it worth after 2 years?
- A. $16,000
- B. $16,200
- C. $18,000
- D. $19,800
4. After a 25% pay rise, a salary is $50,000. What was the original salary?
- A. $37,500
- B. $40,000
- C. $45,000
- D. $62,500
5. Why does compound interest earn more than simple interest over the same period at the same rate?
- A. Compound interest uses a higher rate automatically
- B. Compound interest is calculated on a growing total including previous interest, so interest itself earns interest
- C. Simple interest is always calculated incorrectly
- D. Compound interest ignores the principal after year one