4. Exponential Logarithmic

Compound Interest — Quiz

Test your understanding of compound interest with 5 practice questions.

Practice Questions

Question 1

Under continuous compounding at an annual rate of 6\%, how many years t (to one decimal place) are required for an investment to quadruple?

Question 2

An investment of \5,000 is made at a continuous compounding rate r and accumulates to \$9,000 after 10 years. What is the annual rate r (in percent, to one decimal place)?

Question 3

Which nominal annual rate r (in percent, to two decimal places) compounded quarterly yields an effective annual rate of 7.5\%?

Question 4

For a nominal annual rate of 9\%, which compounding frequency yields the highest effective annual rate?

Question 5

What is the present value of \$20,000 due in 7 years at an APR of 7\% compounded semiannually (rounded to the nearest dollar)?