Compound interest is the interest calculated on the original amount and the interest accumulated over the previous period.

Compound interest calculations

Maths

The ratio unit will cover comparing fractions, percentages and ratios and being able to move fluently between them. This unit ensures pupils have had the opportunity to work with finding the percentage of an amount and the opportunity to calculate interest.

In the prior unit, pupils developed the skills to calculate a given percentage of an amount. In this unit, these skills are extended to performing simple and compound interest calculations.

Percentages

The cost of a game increases by 4% each month for 3 months. It now costs £44.99. What was the original price? 

The cost of a phone contract increases by 3% each month for 3 months. It now costs £60.10. What was the original price? 

The cost of a phone contract increases by 1.6% each month for 13 months. It now costs £59. What was the original price? 

The cost of a streaming service increases by 1.7% each month for 16 months. It now costs £16.50. What was the original price? 

The cost of a music subscription increases by 1.9% each month for 8 months. It now costs £11.16. What was the original price? 

For an investment of £9.60 earning 1.9% interest per year for 8 years,  how much more money would be gained using compound rather than simple interest?

What is the amount of simple 5% interest earned on an investment of £400 over 8 years?

If I invest £800 over 6 years at 1.6% interest, I have £876.80. Is this simple or compound interest? 

What is the amount of simple 1.5% interest earned on an investment of £500 over 9 years?

If I invest £900 over 6 years at 1.6% interest, I have £989.93. Is this simple or compound interest? 

What is the amount of compound 3% interest earned on an investment of £1500 over 3 years?

What is the amount of simple 3% interest earned on an investment of £10 000 over 4 years?

This lesson will be removed by end of Summer Term 2025.

Compound interest calculations

Lesson outcome

This lesson will be removed by end of Summer Term 2025.