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Repeated Proportional Change

Repeated Proportional Change. OCR Module 8. Reminder. How to calculate a PERCENTAGE change. Decrease £17.60 by 15%. Left with 85% of 17.60. MULTIPLIER of 0.85. 85% of 17.60. = 17.60 x 0.85. = £14.96. So…. We can use this procedure for repeated changes like

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Repeated Proportional Change

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  1. Repeated Proportional Change OCR Module 8

  2. Reminder • How to calculate a PERCENTAGE change • Decrease £17.60 by 15% Left with 85% of 17.60 MULTIPLIER of 0.85 85% of 17.60 = 17.60 x 0.85 = £14.96

  3. So…. • We can use this procedure for repeated changes like • Interest of money in bank account • Depreciation of a motor car

  4. e.g. Interest on Bank Account £4 000 earns 5% interest each year. How much is it worth after 3 years? End of Year 1 4 000 x 1.05 = 4 200 COMPOUND INTEREST 4 000 x 1.051 4 000 x 1.05 End of Year 2 4 200 x 1.05 = 4 410 4 000 x 1.052 4 000 x 1.05 x 1.05 End of Year 3 4 410 x 1.05 = 4 630.50 4 000 x 1.053 4 000 x 1.05 x 1.05 x 1.05

  5. Simple Interest? • If an account only receives SIMPLE INTEREST, the £200 earned in the first year would be the same for every year • In our example, that means 4 000 + 3 x 200 = £4 600

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