Repeated Proportional Change OCR Module 8

Reminder How to calculate a PERCENTAGE change Decrease £17.60 by 15% Left with 85% of 17.60 MULTIPLIER of 0.85 85% of 17.60 = 17.60 x 0.85 = £14.96

So…. We can use this procedure for repeated changes like Interest of money in bank account Depreciation of a motor car

e.g. Interest on Bank Account £4 000 earns 5% interest each year. How much is it worth after 3 years? End of Year 1 4 000 x 1.05 = 4 200 COMPOUND INTEREST 4 000 x 1.05 4 000 x 1.051 End of Year 2 4 200 x 1.05 = 4 410 4 000 x 1.052 4 000 x 1.05 x 1.05 End of Year 3 4 410 x 1.05 = 4 630.50 4 000 x 1.05 x 1.05 x 1.05 4 000 x 1.053

Simple Interest? If an account only receives SIMPLE INTEREST, the £200 earned in the first year would be the same for every year In our example, that means 4 000 + 3 x 200 = £4 600