Compound growth and decay
3 exam-style questions. Answers and the mark for each step are on the last page.
- Question 1
Sam invests £3000 for 3 years at per year compound interest.
(a) Work out the value of Sam's investment at the end of the 3 years. Give your answer to the nearest penny.
- Question 2
(a) £1500 is invested at 4% compound interest per year. Interest is added at the end of each year. What is the least whole number of years before the balance exceeds £1750? You must show your working.
- Question 3
(a) Two accounts initially contain equal amounts. Account A gains 10% in year 1 and loses 10% in year 2. Account B gains r% in year 1 and loses the same r% in year 2, where r > 0. After year 2, B contains 32/33 of the amount in A. Find r. You must show your working.
Answers and marks
Question 1
(a) £3183.62
- M1 Writing , or working year by year (, , ...).
- A1 The correct answer, £3183.62.
Question 2
(a)
- P1 Establishing or an equivalent valid method.
- P1 Establishing or an equivalent valid method.
- A1 Correct answer:
Question 3
(a) %
- P1 Establishing or an equivalent valid method.
- P1 Establishing or an equivalent valid method.
- A1 Correct answer: %