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5.01 Compound interest

Interactive practice questions

$\$3500$$3500 is invested for three years at a rate of $10%$10% p.a., compounding annually.

a

Complete the table row for the Third Year.

  Balance + interest Total balance Interest earned
First year $-$ $\$3500$$3500 $\$350$$350
Second year $\$3500+\$350$$3500+$350 $\$3850$$3850 $\$385$$385
Third year $\$3850+\$$$3850+$$\editable{}$ $\$$$$\editable{}$ $\$$$$\editable{}$
Fourth year $\$$$$\editable{}$ $\$$$$\editable{}$ $-$
b

Complete the table row for the Fourth Year to determine the final value of the investment.

  Balance + interest Total balance Interest earned
First year $-$ $\$3500$$3500 $\$350$$350
Second year $\$3500+\$350$$3500+$350 $\$3850$$3850 $\$385$$385
Third year $\$3850+\$$$3850+$$385$385 $\$$$$4235$4235 $\$$$$423.50$423.50
Fourth year $\$4235$$4235$+$+$\$$$$\editable{}$ $\$$$$\editable{}$ $-$
c

Calculate the total interest earned over the three years.

Easy
4min

$\$3200$$3200 is invested for three years at a rate of $6%$6% p.a., compounding annually.

Easy
4min

Tara borrows $\$5000$$5000 at a rate of $4.5%$4.5% p.a, compounding annually.

Easy
3min

Ivan borrows $\$3000$$3000 at a rate of $6.9%$6.9% p.a, compounding annually.

Easy
2min
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Outcomes

VCMNA328

Connect the compound interest formula to repeated applications of simple interest using appropriate digital technologies

VCMNA359 (10a)

Describe, interpret and sketch parabolas, hyperbolas, circles and exponential functions and their transformations.

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