1. Simple and Compound Interest
COURSE 3 LESSON 6-8
Simple and Compound Interest 3 4
You deposit $950 into an account that earns 4 % interest compounded annually. Find the balance in the account after five years. In your last calculation, round to the nearest cent.
Year
Start of
Interest
End of Year 1
$950.00
• 950 = = 2 $
= 1, • 3
$1,
1, = 1,
• 1, 4
$1,
1, = 1,
• 1, 5
$1,
1, = 1,198.10
• 1,
At the end of 5 years, the balance in the account is $1,
6-8

2. Simple and Compound Interest
COURSE 3 LESSON 6-8
Simple and Compound Interest
You invest $225 for four years at an interest rate of
6 % compounded annually. What is your final balance? 1 2
B = p(1 + r)n
Use the compound interest formula.
B = 255( )4
Substitute: p = 225, r = 0.065, n = 4.
255 1
0.065 4
Use a calculator.
Round to the nearest cent.
$289.45
After 4 years, your balance will be $
6-8

3. Simple and Compound Interest
COURSE 3 LESSON 6-8
Simple and Compound Interest
1. You deposit $80 into an account that earns 6% simple interest. Find
the amount of interest earned in 3 years. Then find the final balance
after 3 years.
2. You deposit $80 into an account that earns 6% compounded annually.
How much will be in the account in 3 years?
$14.40; $94.40
$95.28
6-8