Simple interest is where the amount of interest earned is fixed over time. For example, if you saved £1000 at 4% simple interest you would earn £40 per year, every year. The amount of interest earned stays the same when dealing with simple interest.
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what is compound intrest
Compound interest is where interest is paid on the amount already earned leading to greater and greater amounts of interest.
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simple intrest - You deposit £400 in to a bank account paying 5% simple interest per year. How much interest would you have earned after 3 years?
First we need to find 5% of £400. 10% of £400 = £40 so 5% is £20. As the bank pays simple interest this amount stays the same. So after 3 years you will have earned 20 + 20 + 20 = £60.
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compound intrest - You take out a loan of £800 and the bank charges you 15% compound interest per year. If you don't pay off any of the loan in 4 years, how much would you owe the bank?
After 1 year you would owe the bank £800 x 1.15 = £920. To work out how much is owed after four years we would then have to multiply this amount by 1.15 a further 3 times. This can be done on a calculator: £800 x 1.154 = £1399.21
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how do you work out reverse percantages
x= new amount/percentage of original amount x100
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a women buys a painting from a car boot sale. She sells it for £129.75, she made 73% profit from it. How much did she pay for the painting orignally?
x=129.75/173*100=75. She paid £75
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Other cards in this set
Card 2
Front
Compound interest is where interest is paid on the amount already earned leading to greater and greater amounts of interest.
Back
what is compound intrest
Card 3
Front
First we need to find 5% of £400. 10% of £400 = £40 so 5% is £20. As the bank pays simple interest this amount stays the same. So after 3 years you will have earned 20 + 20 + 20 = £60.
Back
Card 4
Front
After 1 year you would owe the bank £800 x 1.15 = £920. To work out how much is owed after four years we would then have to multiply this amount by 1.15 a further 3 times. This can be done on a calculator: £800 x 1.154 = £1399.21
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