Section 1

Are You Ready?

 

 

In this lesson you will apply your knowledge of simple interest and compound interest.

1. Annie Lutaaq has just sold one of her carvings. With part of this money, Annie has bought a $100 bond that pays her simple interest at 5% per annum.
   
   
   1. If the term of her investment is eight years, how much interest will she earn? Answer
      
      
   2. If the principal and interest are added together, what amount will Annie have at the end of eight years? Answer
      
      
2.  
   1. If Annie had invested her $100 in a compound interest bond, paying 5% compounded annually, how much would she have had at the end of eight years? Answer
      
      
   2. How much more interest would Annie have earned by investing her money in the compound interest bond instead of in the simple interest bond? Answer

If you answered the Are You Ready? questions without problems, move on to Discover.

 

If you found the Are You Ready? questions difficult, complete Refresher to review these topics.