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9.05 Comparing simple and compound interest

Interactive practice questions

Determine the truth, or otherwise, of the following statement.

The difference between compound and simple interest is:

  1. Simple interest is calculated on the original amount (the principal) only.
  2. Compound interest is calculated and added in during the length of the time period, and hence has the effect of accumulating interest on interest.

True

A

False

B
Easy
< 1min

If $\$1000$$1000 is invested for $4$4 years with an interest rate of $5%$5% per annum, calculate the final balance, rounded to the nearest cent, if:

Easy
2min

If $\$100000$$100000 is invested for $4$4 years with an interest rate of $10%$10% per annum, calculate the final balance, rounded to the nearest cent, if:

Easy
2min

If $\$100$$100 is invested for $3$3 years with an interest rate of $6%$6% per annum, calculate the final balance, rounded to the nearest cent, if:

Medium
2min
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ACMEM172

use technology to compare, numerically and graphically, the growth of simple interest and compound interest loans and investments

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