Simple or Compound Interest:

Choose the better option!

Calculate and compare the interest accrued in each scenario. Which account
is more advantageous?

Simple Interest Compound Interest

I=PxRxT A = P(1 + i)n
I = Interest is a percentage of the A = Final amount including principal
principal paid over an interval of time P = Principal
P = Principal refers to the sum of money i = interest rate per year (as a decimal)
deposited or loaned n = number of years
R = Rate of interest (as a decimal)
T = Time in years

1. Account Options Interest Accrued Total after 2 years

$1000 deposit for a a. Simple
term of 2 years Interest of 3%
b. Compound
Interest of 3%
Which account is more advantageous?

2. Account Options Interest Accrued Total after 3 years

$1500 deposit for a a. Simple
term of 3 years Interest of 1.5%
b. Compound
Interest of 1%
Which account is more advantageous?

3. Account Options Interest Accrued Total after 4 years

$3000 deposit for a a. Simple
term of 4 years Interest of 2%
b. Compound
Interest of 1.2%
Which account is more advantageous?

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4. Account Options Interest Accrued Total after 5 years
$800 deposit for a a. Simple
term of 5 years Interest of 2%
b. Compound
Interest of 1.9%
Which account is more advantageous?

5. Account Options Interest Accrued Total after 2 years

$2000 deposit for a a. Simple
term of 2 years Interest of 1.4%
b. Compound
Interest of 1.4%
Which account is more advantageous?

6. Account Options Interest Accrued Total after 5 years

$5300 deposit for a a. Simple
term of 5 years Interest of 3%
b. Compound
Interest of 2.8%
Which account is more advantageous?

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 Simple or Compound Interest
Answer Key
1. Account Options Interest Accrued Total after 2 years
$1000 deposit for a a. Simple $60 $1060
term of 2 years Interest of 3%
b. Compound $1060.90
Interest of 3%
Which account is more advantageous? b. Compound Interest Account

2. Account Options Interest Accrued Total after 3 years

$1500 deposit for a a. Simple $67.50 $1567.50
term of 3 years Interest of 1.5%
b. Compound $1545.45
Interest of 1%
Which account is more advantageous? a. Simple Interest Account

3. Account Options Interest Accrued Total after 4 years

$3000 deposit for a a. Simple $240 $3240
term of 4 years Interest of 2%
b. Compound $3146.61
Interest of 1.2%
Which account is more advantageous? a. Simple Interest Account

4. Account Options Interest Accrued Total after 5 years

$800 deposit for a a. Simple $85 $885
term of 5 years Interest of 2%
b. Compound $878.94
Interest of 1.9%
Which account is more advantageous? a. Simple Interest Account

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5. Account Options Interest Accrued Total after 2 years
$2000 deposit for a a. Simple $56 $2056
term of 2 years Interest of 1.4%
b. Compound $2056.39
Interest of 1.4%
Which account is more advantageous? b. Compound Interest Account

6. Account Options Interest Accrued Total after 5 years

$5300 deposit for a a. Simple $795 $6095
term of 5 years Interest of 3%
b. Compound $6084.73
Interest of 2.8%
Which account is more advantageous? a. Simple Interest Account

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