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# 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%

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%

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

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%

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

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%

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

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

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

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

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