Compound Interest Practice Problems

nhance your understanding of compound interest with these 20 practice problems. These exercises will help you grasp how compound interest grows investments or debts over time.

Problems:

Here are the questions based on the provided answers:

1. How much will $600 grow in 3 years if invested at an annual rate of 4%, compounded monthly?
2. What will be the final amount of $1,200 invested at 5% annually, compounded annually after 7 years?
3. Calculate the future value of a $3,000 investment at an annual rate of 2.5%, compounded quarterly over 8 years.
4. Determine the amount after 6 years for $2,500 invested at an 8% annual rate, compounded annually.
5. What is the total amount after 10 years for $1,800 invested at 3% annually, compounded semi-annually?
6. How much interest will $2,500 earn over 5 years if invested at an annual rate of 4.5%, compounded annually?
7. What will $1,000 grow to over 9 years at an annual interest rate of 5%, compounded monthly?
8. Find the future value of $700 invested for 4 years at an annual rate of 6%, compounded annually.
9. Calculate the amount after 3 years for $1,600 invested at a 7% annual rate, compounded quarterly.
10. How much will $900 be worth after 6 years if invested at an annual rate of 4%, compounded annually?
11. What is the future value of $1,100 invested at 3.5% for 5 years, compounded semi-annually?
12. Determine the final amount of $2,000 invested at a 5% annual rate, compounded monthly for 10 years.
13. Calculate the future value of $1,300 invested at 2% annually for 7 years, compounded annually.
14. What will $850 grow to in 8 years if invested at an annual rate of 5%, compounded quarterly?
15. Find the total amount after 4 years for $1,400 invested at an annual rate of 6%, compounded semi-annually.

Answers:

Problem: $600 at 4% annually, compounded monthly for 3 years.
Formula/Calculation: A = 600 (1 + 0.04/12)^(12*3)
Result: A ≈ $676.49
Problem: $1,200 at 5% annually, compounded annually for 7 years.
Formula/Calculation: A = 1200 (1 + 0.05/1)^(1*7)
Result: A ≈ $1,710.34
Problem: $3,000 at 2.5% annually, compounded quarterly for 8 years.
Formula/Calculation: A = 3000 (1 + 0.025/4)^(4*8)
Result: A ≈ $3,484.92
Problem: $2,500 at 8% annually, compounded annually for 6 years.
Formula/Calculation: A = 2500 (1 + 0.08/1)^(1*6)
Result: A ≈ $3,993.85
Problem: $1,800 at 3% annually, compounded semi-annually for 10 years.
Formula/Calculation: A = 1800 (1 + 0.03/2)^(2*10)
Result: A ≈ $2,427.26
Problem: $2,500 at 4.5% annually for 5 years, compounded annually.
Calculation: A = 2500 (1 + 0.045/1)^(1*5)
Result: A ≈ $3,143.13
Problem: $1,000 at 5% annually for 9 years, compounded monthly.
Calculation: A = 1000 (1 + 0.05/12)^(12*9)
Result: A ≈ $1,551.33
Problem: $700 at 6% annually for 4 years, compounded annually.
Calculation: A = 700 (1 + 0.06/1)^(1*4)
Result: A ≈ $885.23
Problem: $1,600 at 7% annually for 3 years, compounded quarterly.
Calculation: A = 1600 (1 + 0.07/4)^(4*3)
Result: A ≈ $1,976.36
Problem: $900 at 4% annually for 6 years, compounded annually.
Calculation: A = 900 (1 + 0.04/1)^(1*6)
Result: A ≈ $1,142.05
Problem: $1,100 at 3.5% for 5 years, compounded semi-annually.
Calculation: A = 1100 (1 + 0.035/2)^(2*5)
Result: A ≈ $1,307.23
Problem: $2,000 at 5% for 10 years, compounded monthly.
Calculation: A = 2000 (1 + 0.05/12)^(12*10)
Result: A ≈ $3,328.89
Problem: $1,300 at 2% for 7 years, compounded annually.
Calculation: A = 1300 (1 + 0.02/1)^(7)
Result: A ≈ $1,481.62
Problem: $850 at 5% for 8 years, compounded quarterly.
Calculation: A = 850 (1 + 0.05/4)^(4*8)
Result: A ≈ $1,255.79
Problem: $1,400 at 6% for 4 years, compounded semi-annually.
Calculation: A = 1400 (1 + 0.06/2)^(2*4)
Result: A ≈ $1,762.34

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