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I/GCSE Mathematics:

Compound Interest & Reverse Percentages

Compound Interest & Reverse Percentages

· IGCSE Mathematics,IGCSE,mathematics,compound interest,percentage

Compound Interest

Example:

A man invests £2000 in a bank for 6 years earning 7% interest per annum. How much does he have at the end of the 6 years?

How do you calculate the question? You will do as follows.

6 x 7% is 42%.

42% of £2000 is £840.

£2000 + £840 is £2840.

He has £2840.

 

That is wrong. The last method used is to solve problems with simple interest.

 

If the question changes to:

A man invests £2000 in a bank for 6 years earning 7% interest of his original investment per year. How much does he have at the end of the 6 years?

This is the problem we would be solving with the last method.

So, how do you calculate compound interest  in I/GCSE Mathematics?

A man invests £2000 in a bank for 6 years earning 7% interest per year. How much does he have at the end of the 6 years?

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Which is the same as..

2000 x 1.07 x 1.07 x 1.07 x 1.07 x 1.07 x 1.07

or more simply,

2000 x 1.076

Reverse Percentage

In I/GCSE Mathematics,

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Example 1:

A woman buys a painting from a car boot sale. She sells it for £129.75- 73% more than she bought it for. How much did she buy it for?

Buying price is 100% of original x

Current price is 173% of original (+73%) £129.75

1% of original is £129.75 ÷ 173 £0.75

New price is 100% è £0.75 x 100

The price she paid was £75.

Example 2:

A man buys a car that decreases in value by 18%. After one year, the car is worth £8,200. How much was it worth new?

New price is 100% of original x

Current price is 82% of original (-18%) £8,200

1% of original is £8,200 ÷ 82 £1,000

New price is 100% è £1,000 x 100

The new price of the car was £10,000

That's all

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AS/A-Level Mathematics: Sequences and Series
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I/GCSE Mathematics: Inverse Proportion
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