Pre algebra- Interest

© 2009 -2011 tutorco.com 1 Q1. The concept of compound interest refers to: A) Earning interest on the original investment. B) Payment of interest on previously earned interest. C) Investing for a multi-year period of time. D) Putting money in safe hands. Q2. Assume the total expense for your current year in college equals $20,000. Approximately how much would your parents have needed to invest 21 years ago in an account paying 8% compounded annually to cover this amount? A) $952 B) $1,600 C) $1,728 D) $3,973 Q3. What is 27months in years? A) 2.7 years B) 2.25 years C) 2.33 years D) 3 years PRE ALGEBRA TOPIC: INTEREST Pre/Al/7/Pre © 2009 -2011 tutorco.com 2 Q4. When using the simple interest formula I = Prn for an investment with an interest rate of 8.2%, the value for r in the formula is: A) 8.2 B) 0.82 C) 0.082 D) 8.24 Q5. An interest rate is given as 4.8% per annum. This is the same as: A) 0.4% per month and 1.2% per quarter B) 0.6% per month and 1.8% per quarter C) 0.4% per month and 1.6% per quarter D) 0.6% per month and 1.6% per quarter