Simple and Compound Interest Paper 1 1. Astrid invests 1200 euros for five years at a nominal annual interest rate of 7.2 %, compounded monthly. (a) Find the interest Astrid has earned during the five years of her investment. Give your answer correct to two decimal places. (3) Helen invests 1200 euros in an annual simple interest scheme for five years. She earns the same interest as Astrid. (b) Find the simple interest rate of this scheme. (3) (Total 6 marks) 2. An amount, C, of Australian Dollars (AUD) is invested for 5 years at 2.5 % yearly simple interest. The interest earned on this investment is 446.25 AUD. (a) Calculate the value of C. (2) 5000 AUD is invested at a nominal annual interest rate of 2.5 % compounded half yearly. (b) Calculate the length of time in years for the interest on this investment to exceed 446.25 AUD. (4) (Total 6 marks) 3. Inge borrows 4500 for 2 years. (a) Bank 1 charges compound interest at a rate of 15 % per annum, compounded quarterly. Calculate the total amount to be repaid at the end of the 2 years. Give your answer correct to two decimal places. (3) (b) Bank 2 charges simple interest, and Inge would repay the same total amount as for Bank 1. Find the rate of interest charged by Bank 2. (3) (Total 6 marks) 4. Mr Tan invested 5000 Swiss Francs (CHF) in Bank A at an annual simple interest rate of r %, for four years. The total interest he received was 568 CHF. (a) Calculate the value of r. (3) Mr Black invested 5000 CHF in Bank B at a nominal annual interest rate of 3.6 %, compounded quarterly for four years. (b) Calculate the total interest he received at the end of the four years. Give your answer correct to two decimal places. (3) (Total 6 marks) 5. Bob invests 3000 USD in a bank that offers simple interest at a rate of 4 per annum. (a) Calculate the number of years that it takes for Bob's money to double. (3) Charles invests 3000 USD in a bank that offers compound interest at a rate of 3.5 per annum, compounded half-yearly. (b) Calculate the number of years that it takes for Charles's money to double. (3) (Total 6 marks) 6. Two brothers Adam and Ben each inherit $6500. Adam invests his money in a bond that pays simple interest at a rate of 5 per annum. Ben invests his money in a bank that pays compound interest at a rate of 4.5 per annum. (a) Calculate the value of Adam's investment at the end of 6 years. (3) (b) Calculate the value of Ben's investment at the end of 6 years. Give your answer correct to 2 decimal places. (3) (Total 6 marks) 7. Andrew invests 20 000 Swiss francs in a bank that offers a 2 simple interest per year for 8 years. (a) Find the interest he has after these 8 years. Philip invests 20 000 Swiss francs for 6 years in a bank at a nominal rate of 5 interest compounded quarterly. (b) Find the total amount in Philip's account after these 6 years. (Total 6 marks) 8. Kurt wants to invest 2000 Euros in a savings account for his new grandson. (a) Calculate the value of Kurt's investment based on a simple interest rate of 4% per annum, after 18 years. Inge tells Kurt about a better account which offers interest at a rate of 3.6% per annum, compounding monthly. (b) Giving your answer to the nearest Euro, calculate the value of Kurt's investment after 18 years if he follows Inge's advice. (Total 8 marks) 9. Hassan invested 10 000 CHF at the end of 1971. The interest rate was 5% per annum. How much interest in total would Hassan have earned at the end of the year 1999 if (a) he had removed the interest from his account at the end of each year; (b) he had not removed the interest from his account at the end of each year. (Total 4 marks)