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.

Changing 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

If I put £9000 in an account and it earns 5% compound interest for the first two years, then 4% for the third year, how much money will be in the account at the end of that year? 

If I put £50 000 in an account and it earns 5% compound interest for the first two years, then 4% for the third year, how much money will be in the account at the end of that year? 

If I put £13 000 in an account and it earns 7% compound interest for the first year, then 2% for the second year, how much money will be in the account at the end of that year?

If I put £2500 in an account and it earns 4% compound interest for the first two years, then 7% for the next five years, how much money will be in the account at the end of that period? 

If I put £2500 in an account and it earns 7% compound interest for the first year, then 2% for the second year, how much money will be in the account at the end of that year? 

If I put £4800 in an account and it earns 5% compound interest for the first two years, then 3% for the third year, how much money will be in the account at the end of that year? 

What is the correct multiplier for compound interest over 5 years at 1.6%?

If I decrease £90 to £18, what is the percentage loss? 

What is the correct multiplier for compound interest over 9 years at 2.5%?

The value of a good investment gains value by 6% compound interest each year. If the investment was worth £30 000 when purchased how much is it worth after 3 years? 

If I increase £90 to £135, what is the percentage gain? 

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

Changing compound interest rates

Lesson outcome

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