Question 1
Stacy is borrowing $5,000 at 4.25% interest for five years. She can choose a simple interest or compound interest. Which one will allow her to owe the LEAST amount of money in interest over those five years?
A. Simple Interest
B. Compound Interest
Question 2
Michael has 2 options to invest $10,000:
1. 4% Simple Interest for 10 years.
2. 3.25% Compound Interest for 10 years.
Which will earn him more money?
A. Option 1
B. Option 2
They are equal
Question 3
Cara took out a loan for a new car of $24,000. She wants to know which financing option she should take:
1. 3% simple interest for 12 years
2. 4% simple interest for 8 years
3. 3.5% compound interest for 6 years
Question 3 options:
A. Option 1
B. Option 2
C. Option 3
D. They are all equal
Question 4 (1 point)
If the principal, interest rate, and time are identical, you will earn more interest with compound interest than you will with simple interest
Question 4 options:
A. True
B. False
Question 5 (1 point)
Match the type of interest with its formula.
Question 5 options:
[ ]A = P(1+r)t
[ ]I = Prt
1. Simple Interest
2. Compound Interest