Compound and Continuous Interest Worksheet
Grade 12 Math worksheet on understanding and calculating compound and continuous interest for financial literacy.
Includes
Standards
Topics
Compound and Continuous Interest
Name:
Date:
Score:
Read each question carefully and provide your answers in the space provided. Show all your work for calculations.
1. Which of the following compounding frequencies will yield the highest return on an investment, assuming the same annual interest rate and time period?
Annually
Semi-annually
Quarterly
Monthly
2. The formula for compound interest is A = P(1 + r/n)^(nt), where A represents the , P is the principal amount, r is the annual interest rate, n is the number of times that interest is compounded per year, and t is the .
3. Continuous compounding uses the mathematical constant 'e', and its formula is A = Pe^(rt), where 'e' is approximately equal to .
4. You invest $5,000 at an annual interest rate of 6% compounded quarterly. How much will your investment be worth after 10 years? Show your work.
5. If you invest $10,000 at an annual interest rate of 5% compounded continuously, how much will you have after 7 years? Show your work.
6. Continuous compounding generally results in a lower final amount compared to daily compounding for the same interest rate and time period.
True
False
Match the term with its corresponding description.
7. Principal
a. The initial amount of money invested or borrowed.
8. Annual Interest Rate
b. The percentage charged or earned on the principal per year.
9. Compounding Frequency
c. How often the interest is calculated and added to the principal.
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