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Year 10 Maths — Compound interest

Work out compound interest and the amount it grows to, and use the same idea for growth and depreciation.

Name: ________________________

  1. 1.$2000 is invested at 10 per cent per year, compounded yearly, for 3 years. What amount does it grow to? Give just the number.

  2. 2.Find the compound interest on $5000 at 10 per cent per year for 2 years. Give just the number.

  3. 3.$4000 is lent at 10 per cent per year, compounded half-yearly, for 1 year. What amount is owed at the end? Give just the number.

  4. 4.Why does compound interest come to more than simple interest after the first year, at the same rate?

    • a) Because each year's interest is worked out on a larger amount
    • b) Because the sum invested is doubled at the start
    • c) Because the time is counted twice over
    • d) Because the rate goes up a little every year

  5. 5.Sort each description by which kind of interest it belongs to.

    Groups: Simple interest · Compound interest

    • The interest is the same amount every year
    • Doubling the time doubles the interest exactly
    • The amount grows faster and faster as the years go by
    • A population rising by the same percentage every year
    • Each year's interest is added on before the next year is worked out
    • Interest is always worked out on the original sum only

  6. 6.A town of 10000 people grows by 10 per cent every year. How many people live there after 2 years?

  7. 7.The simple interest on $4000 at 10 per cent for 2 years is $800. What is the compound interest on the same sum at the same rate and time? Give just the number.

  8. 8.Each card is a rate at which $1000 is invested for 2 years, compounded yearly. Put them in order by the amount at the end, smallest first.

    • 15 per cent per year
    • 20 per cent per year
    • 5 per cent per year
    • 10 per cent per year
    • 8 per cent per year

Answer key — Year 10 Maths — Compound interest

  1. 1. 2662
  2. 2. 1050
  3. 3. 4410
  4. 4. a) Because each year's interest is worked out on a larger amount
  5. 5. The interest is the same amount every year → Simple interest; Each year's interest is added on before the next year is worked out → Compound interest; Interest is always worked out on the original sum only → Simple interest; The amount grows faster and faster as the years go by → Compound interest; Doubling the time doubles the interest exactly → Simple interest; A population rising by the same percentage every year → Compound interest
  6. 6. 12100
  7. 7. 840
  8. 8. 1. 5 per cent per year 2. 8 per cent per year 3. 10 per cent per year 4. 15 per cent per year 5. 20 per cent per year