Checking and securing understanding of compound interest calculations | Maths

Starter quiz

When money is added to savings or loans it is called...

interest ✓

gifting

donating

taxing
$12$ % of $800$ is ______. You may use a calculator.

'96' ✓
$800$ increased by $12$ % is __________. You may use a calculator.

96

812

8.12

896 ✓

960
$7\times7\times7\times7\times7$ simplifies to...

$35$

$7^7$

$7^5$ ✓

$5^7$

$2401$
Which of the below will affect an increase of $2.5$ %?

$\times2.5$

$\times1.25$

$\times1.025$ ✓

$\times0.025$

$\times102.5$
An amount increased by $20$ % then increased by $10$ % will experience an overall increase of ______%

'32' ✓

Exit quiz

$\pounds250+(0.02\times250)+(0.02\times250)+(0.02\times250)$ is an example of a __________ interest calculation.

simple ✓

compound
$\pounds250\times1.02^3$ is an example of a __________ interest calculation.

simple

compound ✓
$\pounds400$ is invested at a rate of $4.2$ % interest for $5$ years. What multiplier would we use in a compound interest calculation?

$4.2$

$1.42$

$104.2$

$1.042$ ✓

$1.04$
$\pounds400$ is invested at a rate of $4.2$ % interest for $5$ years. The values at the end of each year will form __________ sequence.

an arithmetic

a geometric ✓

a quadratic

a fibonacci
$\pounds400$ is invested at a rate of $4.2$ % interest for $5$ years. What is the value of the investment at the end of the $5$ years? $\pounds$ ______

'491.36' ✓
$\pounds500$ is put into a savings account at a rate of $4$ % compound interest p.a. After how many years will the investment reach $\pounds1000$ ? ______

'18' ✓

Worksheet

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Lesson Details

Key learning points

Compound interest can be thought of as a geometric sequence
You can apply your knowledge of geometric sequences to solve algebraic compound interest problems

Common misconception

Pupils get confused between simple interest and compound interest. When presented with a compound interest problem the common error is for pupils to add the same constant amount.

Visual representations are helpful here. The bar models in the first part of the lesson show how compound interest grows year on year. The graphical representation also demonstrates the fundamental difference between the two forms of interest.

Keywords

Simple interest - Interest is money added to savings or loans. Simple interest is always calculated on the original amount.
Compound interest - Compound interest is calculated on the original amount and the interest accumulated over the previous period.