1. Repeated Proportional Change
OCR Module 8

2. 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
= x 0.85
= £14.96

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

4. 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 =
4 000 x 1.05 x 1.05 x 1.05
4 000 x 1.053

5. 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
x 200 = £4 600