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Compound Interest (1)

In this worksheet, students answer questions based on compound interest rates given as percentages.

'Compound Interest (1)' worksheet

Key stage:  KS 4

Curriculum topic:  Ratio, Proportion and Rates of Change

Curriculum subtopic:  Set Up, Solve and Interpret Answers in Growth and Decay Problems

Difficulty level:  

down

Worksheet Overview

QUESTION 1 of 10

Compound Interest is the amount of money earned on a sum that has been invested including the interest added each year.

It is usually written as a percentage of the money invested for each year (per annum or p.a.)

 

Example 1

Jack invests £250 at 1.5% compound interest p.a.

He makes no further withdrawals or investments.

How much is his investment worth after three years?

 

Answer

When we increase something by 1.5%, we can use the percentage multiplier 1.015.

 

After 1 year, Jack has £250 x 1.015 = £253.75

After 2 years, Jack has £253.75 x 1.015 = £257.55625

After 3 years, Jack has £257.55625 x 1.015 = £261.41959... ≈ £261.42

  

Example 2

Jack invests £250 at 1.5% compound interest p.a. 

He makes no further withdrawals or investments.

How much is his investment worth after ten years?

 

Answer

When we increase something by 1.5%, we can use the percentage multiplier 1.015.

 

After 1 year, Jack has £250 x 1.015 = £253.75

After 2 years, Jack has £250 x 1.015² = £257.55625

After 3 years, Jack has £250 x 1.015³ = £261.41959...

 

After 10 years, Jack has £250 x 1.01510 = 290.1352... ≈ £290.14

Amy invests £10500 at 5.5% interest p.a. 

 

She makes no further withdrawals or investments.

 

How much is the investment worth after two years?

 

(Write your answer in £s without the £ sign)

Bill invests £1000 at 2.5% interest p.a. 

 

He makes no further withdrawals or investments.

 

How much is his investment worth after three years?

 

(Write your answer in £s without the £ sign)

Sue invests £200 at 2% interest p.a. 

 

She makes no further withdrawals or investments.

 

How much is her investment worth after three years?

 

(Write your answer in £s without the £ sign)

Jack invests £2500 at 2% interest p.a. 

 

He makes no further withdrawals or investments.

 

How much is his investment worth after two years?

 

(Write your answer in £s without the £ sign)

Kate invests £65000 at 8.5% interest p.a. 

 

She makes no further withdrawals or investments.

 

How much is her investment worth after ten years?

 

(Write your answer in £s without the £ sign)

Amy invests £15000 at 7.5% interest p.a. 

 

She makes no further withdrawals or investments.

 

How much is her investment worth after three years?

 

(Write your answer in £s without the £ sign)

William invests £50000 at 3% interest p.a. 

 

He makes no further withdrawals or investments.

 

How much is his investment worth after three years?

 

(Write your answer in £s without the £ sign)

William invests £50000 at 3% interest p.a. 

 

He makes no further withdrawals or investments.

 

How much is his investment worth after five years?

 

(Write your answer in £s without the £ sign)

Ann invests £10000 at 6% interest p.a. 

 

She makes no further withdrawals or investments.

 

How much is her investment worth after two years?

 

(Write your answer in £s without the £ sign)

Fred invests £20000 at 4% interest p.a. 

 

He makes no further withdrawals or investments.

 

How much is his investment worth after two years?

 

(Write your answer in £s without the £ sign)

  • Question 1

Amy invests £10500 at 5.5% interest p.a. 

 

She makes no further withdrawals or investments.

 

How much is the investment worth after two years?

 

(Write your answer in £s without the £ sign)

CORRECT ANSWER
11686.76
EDDIE SAYS
10500 × 1.055²
  • Question 2

Bill invests £1000 at 2.5% interest p.a. 

 

He makes no further withdrawals or investments.

 

How much is his investment worth after three years?

 

(Write your answer in £s without the £ sign)

CORRECT ANSWER
1076.89
EDDIE SAYS
1000 × 1.025³
  • Question 3

Sue invests £200 at 2% interest p.a. 

 

She makes no further withdrawals or investments.

 

How much is her investment worth after three years?

 

(Write your answer in £s without the £ sign)

CORRECT ANSWER
212.24
EDDIE SAYS
200 × 1.02³
  • Question 4

Jack invests £2500 at 2% interest p.a. 

 

He makes no further withdrawals or investments.

 

How much is his investment worth after two years?

 

(Write your answer in £s without the £ sign)

CORRECT ANSWER
2601
2601.00
EDDIE SAYS
2500 × 1.02²
  • Question 5

Kate invests £65000 at 8.5% interest p.a. 

 

She makes no further withdrawals or investments.

 

How much is her investment worth after ten years?

 

(Write your answer in £s without the £ sign)

CORRECT ANSWER
146963.92
EDDIE SAYS
65000 × 1.08510
  • Question 6

Amy invests £15000 at 7.5% interest p.a. 

 

She makes no further withdrawals or investments.

 

How much is her investment worth after three years?

 

(Write your answer in £s without the £ sign)

CORRECT ANSWER
18634.45
EDDIE SAYS
15000 × 1.075³
  • Question 7

William invests £50000 at 3% interest p.a. 

 

He makes no further withdrawals or investments.

 

How much is his investment worth after three years?

 

(Write your answer in £s without the £ sign)

CORRECT ANSWER
54636.35
EDDIE SAYS
50000 × 1.03³
  • Question 8

William invests £50000 at 3% interest p.a. 

 

He makes no further withdrawals or investments.

 

How much is his investment worth after five years?

 

(Write your answer in £s without the £ sign)

CORRECT ANSWER
57963.70
EDDIE SAYS
50000 × 1.035
  • Question 9

Ann invests £10000 at 6% interest p.a. 

 

She makes no further withdrawals or investments.

 

How much is her investment worth after two years?

 

(Write your answer in £s without the £ sign)

CORRECT ANSWER
11236.00
11236
EDDIE SAYS
10000 × 1.06²
  • Question 10

Fred invests £20000 at 4% interest p.a. 

 

He makes no further withdrawals or investments.

 

How much is his investment worth after two years?

 

(Write your answer in £s without the £ sign)

CORRECT ANSWER
21632.00
21632
EDDIE SAYS
20000 × 1.04²
---- OR ----

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