The rate of interest is the percentage by which an amount increases.

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

When a number is multiplied by itself multiple times, it can be written more simply in exponential form.

Calculating compound interest rates

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 value of a car depreciates by 4% each year. If the car is worth £10 000 when purchased, how much is it worth after 3 years? 

The value of a poor investment depreciates by 25% each year. If the investment was worth £30 000 when purchased how much is it worth after 3 years? 

The value of a poor investment depreciates by 8% each year. If the investment was worth £20 000 when purchased how much is it worth after 3 years? 

A good investment gains value by 12% each year. If the investment was worth £20 000 when purchased, how much is it worth after 3 years? 

The value of a car is £8671.80 after 4 years of ownership. It was bought for £10 000. What is the percentage decrease per year?

The value of a poor investment is £18 544.33 after 5 years of ownership. It was bought for £20 000. What is the percentage decrease in value per year?

Which statement is the equivalent of "Decrease 900 by 21%"?

If I increase £45 to £54, what is the percentage gain? 

What is the amount of simple 1.8% interest earned on an investment of £12 000 over 3 years?

What is the amount of compound 1.6% interest earned on an investment of £1900 over 9 years?

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? 

What is the amount of simple 2.5% interest earned on an investment of £15 000 over 5 years?

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

Calculating compound interest rates

Lesson outcome

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