Name___________________________________ Date____________
Compound Interest Formula:
A: accumulated
amount (final value of an investment)
P: principal (initial value of an investment)
r: annual interest rate in percentage (%)
n: number of times the interest is compounded per year
t: number of years
1. Alex has $4864.77 in his money market account currently. If
the annual interest rate os 3.9%, and the interest is compounded biweekly, how
much money was in his account 2 years ago? (1 year = 52 weeks)
2. Emily opens a savings account in a bank with the annual interest rate of 2.7%. If she deposits $6000.00 to the account, and the interest is compounded daily, how much interest will she earn after 4 years? (1 year = 365 days)
3. Given: initial investment of $100,000 and annual compounding. After 10 years, however, your investment was worth $250,000. Find your annualized internal rate of return.
4. Calculate the following interest amounts:
| Principle | Rate(APR %) | Time (years) | Compounding Periods | Interest | Total |
| $500 | 4.5 | 5 | Annually | ||
| $2,500 | 5.6 | 4 | *Quarterly | ||
| $10,000 | 8 | 10 | Daily |
5. Calculate the following interest amounts:
| Principle | Rate(APR %) | Time (years) | Compounding Periods | Amount Added each compounding period | Interest | Total |
| $500 | 4.5 | 5 | Annually | $100 | ||
| $2,500 | 5.6 | 4 | *Quarterly | $100 | ||
| $10,000 | 8 | 2 | Daily | $0 |
*Quarterly = 4 times a year