Compound Interest and Reverse Percentages

Front

Change 6.75% to a decimal.

Back

0.0675

Front

What is a 10% increase as a multiplier?

Back

1.10

Front

What is a 10% decrease as a multiplier?

Back

0.90

Front

A new car bought for £32000 depreciates (loses value) at 20% each year for the first 4 years. What will the value of the car be when it's 4 years old?

Back

£13107.20

Front

£4000 is invested in a bank account paying 5% per annum (per year). How much is the investment worth in 3 years?

Back

£4630.50

Front

Define compound interest.

Back

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods.

Front

What is the formula for compound interest?

Back

A = P(1 + r/n)^(nt), where A is the amount, P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.

Front

What does 'depreciation' mean in finance?

Back

The reduction in the value of an asset over time, due to wear and tear or obsolescence.

Front

How do you calculate the value of an asset after depreciation?

Back

Value = Initial Value × (1 - Depreciation Rate)^Number of Years.

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any accumulated interest.