Flashcards · Maths · Ratio and Proportion
Repeated Percentage Change and Compound Interest
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What is the multiplier for a 15% increase?
1.15.
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What is the multiplier for a 15% decrease?
0.85.
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What is the multiplier for a 5% increase?
1.05.
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What is the multiplier for a 2% decrease?
0.98.
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How do you apply the same percentage change 3 times?
Multiply by the multiplier cubed, or multiplier\(^3\).
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What is compound interest?
Interest paid on the original amount plus the interest already earned.
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What is simple interest?
Interest paid on the original amount only, so the same amount is added each year.
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Which gives more after 5 years, simple or compound interest?
Compound interest.
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What is \(1.1^2\)?
1.21.
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Why is two 10% increases not a 20% increase?
The second 10% is taken from the larger amount, so the total increase is 21%.
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£1000 grows by 10% each year. What is it worth after 2 years?
\(1000 \times 1.1^2 = \pounds 1210\).
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A car worth £12 000 loses 20% of its value each year. What is it worth after 2 years?
\(12\,000 \times 0.8^2 = \pounds 7680\).
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What is depreciation?
A fall in the value of something over time.
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What do you do to a final amount to find the original after a percentage increase (Higher tier)?
Divide it by the multiplier.
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After a 25% increase a price is £150 000. What was the original (Higher tier)?
\(150\,000 \div 1.25 = \pounds 120\,000\).
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How many decimal places should a money answer have?
2, such as £163.20.