Compounding Interest Formulas: Calculations & Examples


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question 1 of 3

Which of the following is the correct formula for compound interest?

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1. In the compound interest formula, what does the n stand for?

2. Tom deposits $2,000 into an account with an interest rate of 2.5% that is compounded quarterly. Rounding to the nearest dollar, what is the balance in Tom's account after 5 years?

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About This Quiz & Worksheet

The idea of compound interest is a standard practice among financial institutions that can provide substantial returns on deposits and investments. The quiz and worksheet for this lesson were designed to help you test your knowledge of the method of calculating compound interest.

Quiz & Worksheet Goals

These assessments will test you on:

  • Mathematical variables
  • The formula for calculating compound interest
  • Projected balances on deposits
  • Example scenarios using compound interest

Skills Practiced

This quiz and worksheet let you gauge your skills of:

  • Reading comprehension - ensure that you draw the most important information from the related lesson on calculating compound interest
  • Knowledge application - use your knowledge to answer questions about the mathematical formula for compound interest
  • Problem solving - use acquired knowledge to solve practice problems on compound interest calculation

Additional Learning

To fully understand the information from the lesson titled Compounding Interest Formulas: Calculations & Examples, take the time to review the associated material. These objectives will be addressed:

  • Identify the pieces of a mathematical formula
  • Understand principal and accrued interest
  • Connect money, time and percentages using different variables
  • Use examples to measure deposits and returns