Topics · Edexcel GCSE Maths (1MA1)
Compound interest grows on the new amount each year, simple interest on the first amount only. The difference is small at first, then it is not.
Sam invests £2400 for 3 years in a savings account.
The account pays 4% compound interest per year.
Work out the value of Sam's investment at the end of 3 years.
See why
After how many whole years is Sam's investment first worth more than £3000?
Compound: £2,400Simple: £2,400
Now a fresh one
A car is worth £18 000.
Its value falls by 12% each year.
Work out the value of the car after 2 years.
Learn it properly
Where it comes up in the exam
- Specification R16: set up, solve and interpret growth and decay problems, including compound interest.
- On both tiers. Higher papers add iterative work, such as finding when a value first passes a target.
- Pearson's examiners report students mixing up simple and compound interest.