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Edexcel IGCSE Maths復(fù)習(xí)筆記 1.9.1 Compound Interest

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Edexcel IGCSE Maths復(fù)習(xí)筆記 1.9.1 Compound Interest

What is compound interest?

Compound interest is where interest is paid on the interest from the year (or whatever time frame is being used) before as well as on the original amount
This is different from?simple interest?where interest is only paid on the original amount

How do you work with compound interest?

For COMPOUND changes (can be a decrease as well as an increase):
- Keep multiplying by the decimal equivalent of the percentage you want
Otherwise do the same as normal:
Identify “before” & “after” quantities
FIND percentage we want:
- Increase – ADD percentage to 100
- Decrease – SUBTRACT from 100
Write down a STATEMENT connecting “before” and “after”:
- “after is a percentage of before”
Write down the statement as an EQUATION using decimal equivalent
- remember “is” means “=”
SUBSTITUTE and SOLVE

Exam Tip

This method works for any Compound Change – increase or decrease.Remembering "? m ? m ? m = ? m^3"?can make life a lot quicker:It is usually much easier to multiply by decimal equivalent raised to a power than to multiply by the decimal equivalent several times in a row.

Worked Example