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Lesson details
Key learning points
- In this lesson, we will learn how savings grow over time. We will investigate how to calculate the amount of time it would take to save a given amount with regular small deposits, and the concepts of simple and compound interest.
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5 Questions
Q1.
A mortgage is a debt that must be repaid, with interest, as a result of purchasing a house.
False
Q2.
If you had a mortgage, you would prefer to have a high interest rate.
True
Q3.
If I borrowed £100,000 in the form of a mortgage at a rate of 4% per year interest for 5 years, how much would I pay back at the end? (Assume compound interest, no payments made until the end and the answer is rounded to the nearest pound).
£104,000
£120,000
£520,000
Q4.
If I borrowed £350,000 in the form of a mortgage at a rate of 3.2% per year interest for 20 years, how much would I pay back at the end? (Assume compound interest, no payments made until the end and the answer is rounded to the nearest pound).
£574,000
£657,147
£974,000
Q5.
Which would cost more? A £200,000 mortgage that had a rate of 0.5% for 35 years or a £120,000 mortgage that had a rate of 3% for 25 years?
£120,000 mortgage that had a rate of 3% for 25 years
5 Questions
Q1.
If you saved £300 a month, how long would it take you to save £9,600?
3.2 years
32 years
96 months
Q2.
Simple interest is the interest that accrues upon the initial amount borrowed (or saved), and the interest, as times goes on.
True
Q3.
Compound interest is the interest that accrues upon the initial amount borrowed. It is a fixed sum every year (or other time period).
True
Q4.
If I saved £5,000 with Oak National Bank at a compound interest rate of 7% for 9 years, how much would I have, rounded to the nearest penny, at the end of the 9 years?
£8,125.00
£9,192.29
£9835.27
Q5.
When you save money, you want a low interest rate.
True