Applications of Percentage in Banking. Simple and Compound Interest

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5.4Applications of Percentage in Banking. Simple and Compound Interest

Applications of Percentage in Banking. Simple and Compound Interest Revision Questions

1. . A customer deposited $2,400 in his savings account and after two years, he withdrew $2,700 from his account leaving it with zero balance. What is the interest this customer earned from the bank?

  1. $2,700
  2. $300
  3. 8.89%
  4. 4.45%

Correct Answer: B

2. . A customer deposited $6,800 in his savings account (at simple interest rate) and after five years, he withdrew $8,000 from his account leaving it with zero balance. What is the yearly interest rate the bank applied to this customer?

  1. 6.8%
  2. 8.5%
  3. 17.6%
  4. 8.8%

Correct Answer: D

3. . A bank applies annually 3.8% simple interest rates. What is the balance of a customer in this bank after four years if he deposits $5,000 today?

  1. $380
  2. $5,380
  3. $5,760
  4. $10,760

Correct Answer: B

4. . The total interest accumulated in a savings account in five years is $2,000 and the actual balance is $14,620. What is the yearly interest rate if the bank applies simple interest rates to its customers?

  1. 7.9%
  2. 15.8%
  3. 13.68%
  4. 6.84%

Correct Answer: A

5. . The average annual inflation rate (increase in the living cost including prices) in country X during the past five years was 5% per year. How much does an item cost today if five years ago it was worth $50?

  1. $63.8
  2. $62.5
  3. $60.0
  4. $55.0

Correct Answer: A

6. . The price of a house three years ago was $100,000 and now it is worth $126,000. What was the average inflation rate during this period?

  1. 1.26%
  2. 8.0%
  3. 11.6%
  4. 12.6%

Correct Answer: B

7. . A customer deposits $7,000 in his savings account where the bank applies a 2.4% yearly interest compounded once in a year. What will the balance of this customer be after six years?

  1. $8,070
  2. $8,092
  3. $10,920
  4. $15,600

Correct Answer: A

8. . A customer's actual balance after four years of depositing funds in a bank is $11,234. Calculate the original amount he deposited if the bank applies 3% interest rates compounded twice a year.

  1. $10,000
  2. 10,560
  3. $9,973
  4. $9,768

Correct Answer: C

9. . A customer is undecided about the best bank to choose to deposit his savings. There are three banks available in his city: A, B and C. Bank A applies simple interest rates of 2.7% annum; bank B applies 2.5% interest rates compounded once a year, while bank C applies 2.2% interest rates compounded twice a year. Which bank provides a higher earning after three years?

  1. Bank A
  2. Bank B
  3. Bank C
  4. All banks provide the same earning during the given period

Correct Answer: A

10. . Alice wants to buy a house that costs $150,000 but she has only $130,000 saved so far. She decides to borrow the rest from a bank that applies 2.7% of interest compounded thrice in a year. She agrees to pay off the loan in five years. How much more than the actual price Alice has to pay for her new house?

  1. $1,620
  2. $2,800
  3. $2,877
  4. $4,860

Correct Answer: C

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