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Interest

Practise calculating simple interest and compound interest on investments and loans.

Compare Level 1 Level 2 Level 3 Level 4 Level 5 Exam-Style Description Help More Finance

This is level 2; Investments earning compound interest. Give your first nine answers to two decimal places. You can earn a trophy if you get at least 9 correct and you do this activity online.

Bryan is earning a salary of £32,000 this year (2020). Each year he receives a 4% pay rise.

What will Bryan earn in 2021?

£ Correct Wrong

What will Bryan earn in 2022?

£ Correct Wrong

What will Bryan earn in 2023?

£ Correct Wrong

Find the total amount available if ...

£830 is invested at 1% pa compound interest for 5 years.

£ Correct Wrong

$720 is invested at 1% pa compound interest for 12 years.

$ Correct Wrong

€216 is invested at 4% pa compound interest for 13 years.

Correct Wrong

Find the amount of interest earned if...

£290 is invested at 3% pa compound interest for 9 years.

£ Correct Wrong

$400 is invested at 5% pa compound interest for 15 years.

$ Correct Wrong

€731 is invested at 5% pa compound interest for 13 years.

Correct Wrong

How many years would it take for ...

£765.77 to be accrued after £600 is invested with 5% pa compound interest.

Years: Correct Wrong

$12445.28 to be accrued after $6930 is invested with 5% pa compound interest.

Years: Correct Wrong

€1018.06 to be accrued after €625 is invested with 5% pa compound interest.

Years: Correct Wrong

Check

This is Interest level 2. You can also try:
Level 1 Level 3 Level 4 Level 5

Instructions

Try your best to answer the questions above. Type your answers into the boxes provided leaving no spaces. As you work through the exercise regularly click the "check" button. If you have any wrong answers, do your best to do corrections but if there is anything you don't understand, please ask your teacher for help.

When you have got all of the questions correct you may want to print out this page and paste it into your exercise book. If you keep your work in an ePortfolio you could take a screen shot of your answers and paste that into your Maths file.

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Description of Levels

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Percentages - Before starting the Interest exercise make sure you are confident finding percentages of quantities.

Compare: - A table to be filled in Comparing the results of investing with simple interest against the results of investing with compound interest.

Level 1 - Investments earning simple interest

Level 2 - Investments earning compound interest

Level 3 - Loans accruing compound interest

Level 4 - Appreciation and depreciation

Level 5 - Interest calculated half-yearly, quarterly or monthly

Overdraft Charges - Do you understand how your bank charges you for taking out an overdraft?

Amortisation and Annuities - An exercises containing problems about gradually paying off loans and calculating pension plans.

Exam Style Questions - A collection of problems in the style of GCSE or IB/A-level exam paper questions (worked solutions are available for Transum subscribers).

More on this topic including lesson Starters, visual aids, investigations and self-marking exercises.

Answers to this exercise are available lower down this page when you are logged in to your Transum account. If you don’t yet have a Transum subscription one can be very quickly set up if you are a teacher, tutor or parent.

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Curriculum Reference

See the National Curriculum page for links to related online activities and resources.

Compound Interest Formulas

$$\text{Final amount} = P(1 + \frac{r}{100})^n$$
$$\text{Interest earned} = P(1 + \frac{r}{100})^n - P$$

\(P\) is the principal, the amount originally invested.

\(r\) is the rate of interest expressed as a percentage.

\(n\) is the number of years the amount was invested for.

Don't wait until you have finished the exercise before you click on the 'Check' button. Click it often as you work through the questions to see if you are answering them correctly. You can double-click the 'Check' button to make it float at the bottom of your screen.

Answers to this exercise are available lower down this page when you are logged in to your Transum account. If you don’t yet have a Transum subscription one can be very quickly set up if you are a teacher, tutor or parent.

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