Compound Interest Calculations Quiz

Test your knowledge on compound interest with these questions covering formulas, rates, compounding periods, and more.

Practice Learn Test

What is the formula for compound interest?

P * (1 + r/n)^nt

P * r * t

P + r + n + t

P / (1 + r/n)^nt

If the principal amount is $1000, the interest rate is 5%, and the time period is 2 years, what is the compound interest?

$50

$100

$102.50

$105.50

How often is interest compounded annually?

Once

Twice

Four times

It varies

What is the difference between compound interest and simple interest?

Compound interest includes interest on interest, while simple interest does not.

Simple interest includes interest on interest, while compound interest does not.

Compound interest and simple interest are the same.

Both compound interest and simple interest exclude interest on interest.

If the principal amount is $5000, the interest rate is 8%, and the time period is 3 years, what is the compound amount?

$6480

$5760

$5400

$5120

If the principal amount is $8000, the interest rate is 10%, and the time period is 5 years, what is the compound interest?

$5104.89

$4000

$5902.50

$7000

What is the present value formula used in compound interest calculations?

PV = FV / (1 + r/n)^nt

PV = FV * (1 + r/n)^nt

PV = FV * r * t

PV = FV + r + n + t

What does the term 'APY' stand for in the context of compound interest?

Annual Percentage Yield

Accumulated Principal Yield

Average Percentage Yearly

Annual Principal Yield

If the compound interest for an investment is $1200 and the principal amount is $10,000, what is the effective interest rate?

12%

10%

15%

20%

#10

What is the effective annual rate (EAR) if the nominal interest rate is 6% compounded quarterly?

6.09%

6.15%

6.25%

#11

If the nominal interest rate is 8% compounded monthly, what is the equivalent nominal interest rate compounded quarterly?

12%

#12

What is the continuous compounding formula for compound interest?

P * e^(rt)

P * (1 + r/n)^nt

P * r * t

P / (1 + r/n)^nt

#13

What is the relationship between the nominal interest rate and the effective interest rate?

They are equal.

The effective interest rate is higher than the nominal interest rate.

The nominal interest rate is higher than the effective interest rate.

The relationship depends on the compounding frequency.

#14

If the principal amount is $3000, the interest rate is 6%, and the time period is 2 years, what is the compound amount compounded semi-annually?

$3615.09

$3185.04

$3240

$2950

#15

If the principal amount is $7000, the interest rate is 12%, and the time period is 3 years, what is the compound amount compounded quarterly?

$10584.48

$9261

$8232

$7895.32