Compound and Continuous Interest
Explore the basics of compound and continuous interest with real-world problems for Grade 6 students.
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Compound and Continuous Interest
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Read each question carefully and answer to the best of your ability. Show your work where applicable.
Interest is the money paid for the use of money. When you save money in a bank, the bank pays you interest. When you borrow money, you pay interest.
1. Interest is the paid for the use of money.
2. When you deposit money in a bank, the bank pays you .
3. The original amount of money deposited or borrowed is called the .
4. If you deposit $100 into a savings account that earns 5% simple interest per year, how much interest would you earn after 1 year?
5. What is the main difference between simple interest and compound interest?
Simple interest is always higher.
Compound interest is calculated only on the principal amount.
Compound interest is calculated on the principal and accumulated interest.
There is no difference.
6. Continuous interest means interest is calculated and added constantly, without any specific compounding period.
True
False
7. You invest $200 in an account that earns 10% interest compounded annually. How much money will you have after 2 years?
(Hint: Calculate interest for year 1, then add it to the principal for year 2's calculation.)