 New Zealand
Level 6 - NCEA Level 1

Compound Interest - an Introduction

Interactive practice questions

$\$3000$$3000 is invested at 4%4% p.a., compounded annually. The table below tracks the growth of the principal over three years. Time Period nn (years) Value at beginning of time period Value at end of time period Interest earned in time period 11 \3000$$3000 $\text{A}$A $\text{B}$B
$2$2 $\text{C}$C $\$3244.80$$3244.80 \text{D}D 33 \3244.80$$3244.80 $\$3374.59$$3374.59 \text{E}E a What value should go in cell \text{A}A? b What value should go in cell \text{B}B? c What value should go in cell \text{C}C? d What value should go in cell \text{D}D? e What value should go in cell \text{E}E? f What is the total interest earned over the three years? Easy Approx 6 minutes Sign up to try all questions Dave's investment of \6000$$6000 earns interest at $2%$2% p.a, compounded annually over $3$3 years.

Answer the following questions by repeated multiplication.

A $\$20902090 investment earns interest at $4.2%$4.2% p.a. compounded annually over $17$17 years. Use the compound interest formula to calculate the value of this investment to the nearest cent.

Outcomes

NA6-3

Apply everyday compounding rates

91026

Apply numeric reasoning in solving problems