### 9-4: TEKS Practice

• 1. Robert deposits \$300.00 in a savings account that earns 5% interest compounded annually. Figure 1 shows the compound interest and the final balance for 3 years. Find the compound interest and account balance for year 4 to complete the table.

• 2. Randall deposits \$400 in an account that earns 5% interest compounded annually. Teresa deposits the same amount into an account that earns 5% simple interest. Which account will have a greater balance after 2 years?

• A. Teresa's account balance is greater.

• B. Randall's account balance is greater.

• C. After 2 years, Randall's and Teresa's account balances are equal.

• 3. Suppose that \$9,000 is invested in an account at 6% interest. Find the account balance after 7 years if the interest is compounded annually.

• 4. A company will need \$50,000 in 6 years for a new addition. To meet this goal, the company deposits money in an account today that pays 5% interest compounded annually. Find the amount to the nearest hundred dollars that should be invested to total \$50,000 in 6 years.

• 5.

• a. What is the value of a \$5,000 investment after 6 years at 4% interest compounded quarterly?

• b. How much interest does the investment earn?

• 6. Reasoning Two bank accounts open on the same day with original deposits of \$725. The first account earns 2% interest compounded annually. The second account earns 2% simple interest.

• a. What is the balance of the first account after 1 year?

• b. What is the balance of the second account after 1 year?

• c. Which account will have a greater balance after 1 year?

• A. The first account.

• B. The second account.

• C. They will have the same balance.

• 7. Writing An investor considers two investment bonds. One \$8,000 bond offers 9% interest compounded annually for 10 years. Another \$8,000 bond offers 9% interest compounded quarterly for 10 years.

• a. How much more interest would the investor earn from the bond with quarterly compounding? Round to the nearest dollar as needed.

• b. Explain how to find the interest rate the bond with annual compounding would have to offer so the interest earned would be the same for both bonds.

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