Changing compound interest rates | Maths | Quizalize & Oak National Academy

Starter quiz

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

$1.16^5$

$1.016^5$ ✓

$1.005^6$
If I decrease £90 to £18, what is the percentage loss?

'80%' ✓
What is the correct multiplier for compound interest over 9 years at 2.5%?

$1.25^9$

$1.025 \times 9$

$1.025^9$ ✓
Increase 500 by 4.9%.

'524.5' ✓
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?

'35730.48' ✓
If I increase £90 to £135, what is the percentage gain?

'50' ✓

Exit quiz

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?

'10319.40' ✓
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?

'57330' ✓
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?

'14188.20' ✓
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?

'3792.50' ✓
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?

'2728.50' ✓
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?

'5450.76' ✓

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Lesson Details

Key learning points

By considering the calculations for compound interest, you can be more efficient.
Through understanding the structure, you can adapt to changing percentages.
Part of that structure is understanding the period of time for each interest rate.
Part of that structure is understanding finding a percentage of a percentage.

Common misconception

Assuming that an increase of 10% followed by a decrease of 10% takes you back to 100%, etc.

Provide plenty of examples to illustrate the structure of what happens. If you increase a number by a percentage the number will increase meaning that you will be finding 10% of a larger number and hence decrease by more.

Keywords

Compound interest - Compound interest is the interest calculated on the original amount and the interest accumulated over the previous period.
Exponential form - When a number is multiplied by itself multiple times, it can be written more simply in exponential form.