Simple and Compound Interest Practice Worksheet for learning financial math concepts.
A worksheet titled "Simple and Compound Interest Practice Worksheet" with fill-in-the-blank questions about interest formulas and definitions.
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Step-by-step solution for: Simple And Compound Interest Practice Worksheet - Fill Online ...
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Step-by-step solution for: Simple And Compound Interest Practice Worksheet - Fill Online ...
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Here’s the full solution with explanations for each question:
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1. The amount paid to a depositor for keeping their money in a savings account is called:
✔ C. interest
> Explanation:
> *Interest* is the money earned on a deposit or loan. The *principal* is the original amount deposited, and the *rate* is the percentage used to calculate interest. So, the correct answer is interest.
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2. The ________ determines how much is paid to the depositor each year.
✔ D. rate
> Explanation:
> The *interest rate* determines how much interest is earned annually. For example, if the rate is 5%, then 5% of the principal is paid each year as interest.
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3. The amount of the original investment is called:
✔ A. principle *(Note: This should be "principal," but it's likely a typo in the worksheet)*
> Explanation:
> The *principal* is the initial amount of money invested or borrowed. It's the base amount on which interest is calculated.
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4. Fill-in the appropriate words below:
a) Simple interest is paid on principal only.
b) Compound interest is paid on both principal and interest.
> Explanation:
> - *Simple interest* is calculated only on the original principal.
> - *Compound interest* is calculated on the principal and any previously earned interest (so it grows faster).
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5. The formula for simple interest is:
✔ I = P × r × t
> Explanation:
> Where:
> - I = interest earned
> - P = principal (initial amount)
> - r = annual interest rate (as a decimal)
> - t = time in years
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6. The formula for the ending balance on an account with simple interest is:
✔ A = P + I or A = P(1 + rt)
> Explanation:
> The total amount (ending balance) is the principal plus the interest earned.
> Using the formula from #5:
> A = P + (P × r × t) = P(1 + rt)
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7. The formula for the ending balance on an account with compound interest is:
✔ A = P(1 + r/n)^(nt)
> Explanation:
> Where:
> - A = final amount
> - P = principal
> - r = annual interest rate (decimal)
> - n = number of times interest is compounded per year
> - t = time in years
> For example, if interest is compounded annually, n = 1; quarterly, n = 4, etc.
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8. In the simple interest formula I = P × r × t:
a) What does the "r" represent?
➡️ The annual interest rate (as a decimal)
> Example: If the rate is 6%, then r = 0.06
b) What does the "t" represent?
➡️ Time in years
> Example: If money is invested for 3 years, t = 3
c) What does the "P" represent?
➡️ The principal (original amount invested)
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1. C. interest
2. D. rate
3. A. principle (should be *principal*)
4. a) Simple
b) Compound
5. I = P × r × t
6. A = P(1 + rt) or A = P + I
7. A = P(1 + r/n)^(nt)
8.
a) Annual interest rate (as a decimal)
b) Time in years
c) Principal (original investment)
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Let me know if you’d like this formatted as a PDF or need examples worked out!
Here’s the full solution with explanations for each question:
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Simple and Compound Interest Practice Worksheet
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1. The amount paid to a depositor for keeping their money in a savings account is called:
✔ C. interest
> Explanation:
> *Interest* is the money earned on a deposit or loan. The *principal* is the original amount deposited, and the *rate* is the percentage used to calculate interest. So, the correct answer is interest.
---
2. The ________ determines how much is paid to the depositor each year.
✔ D. rate
> Explanation:
> The *interest rate* determines how much interest is earned annually. For example, if the rate is 5%, then 5% of the principal is paid each year as interest.
---
3. The amount of the original investment is called:
✔ A. principle *(Note: This should be "principal," but it's likely a typo in the worksheet)*
> Explanation:
> The *principal* is the initial amount of money invested or borrowed. It's the base amount on which interest is calculated.
---
4. Fill-in the appropriate words below:
a) Simple interest is paid on principal only.
b) Compound interest is paid on both principal and interest.
> Explanation:
> - *Simple interest* is calculated only on the original principal.
> - *Compound interest* is calculated on the principal and any previously earned interest (so it grows faster).
---
5. The formula for simple interest is:
✔ I = P × r × t
> Explanation:
> Where:
> - I = interest earned
> - P = principal (initial amount)
> - r = annual interest rate (as a decimal)
> - t = time in years
---
6. The formula for the ending balance on an account with simple interest is:
✔ A = P + I or A = P(1 + rt)
> Explanation:
> The total amount (ending balance) is the principal plus the interest earned.
> Using the formula from #5:
> A = P + (P × r × t) = P(1 + rt)
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7. The formula for the ending balance on an account with compound interest is:
✔ A = P(1 + r/n)^(nt)
> Explanation:
> Where:
> - A = final amount
> - P = principal
> - r = annual interest rate (decimal)
> - n = number of times interest is compounded per year
> - t = time in years
> For example, if interest is compounded annually, n = 1; quarterly, n = 4, etc.
---
8. In the simple interest formula I = P × r × t:
a) What does the "r" represent?
➡️ The annual interest rate (as a decimal)
> Example: If the rate is 6%, then r = 0.06
b) What does the "t" represent?
➡️ Time in years
> Example: If money is invested for 3 years, t = 3
c) What does the "P" represent?
➡️ The principal (original amount invested)
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✔ Final Answers Summary:
1. C. interest
2. D. rate
3. A. principle (should be *principal*)
4. a) Simple
b) Compound
5. I = P × r × t
6. A = P(1 + rt) or A = P + I
7. A = P(1 + r/n)^(nt)
8.
a) Annual interest rate (as a decimal)
b) Time in years
c) Principal (original investment)
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Let me know if you’d like this formatted as a PDF or need examples worked out!
Parent Tip: Review the logic above to help your child master the concept of simple compound interest worksheet.
