воскресенье, 1 января 2017 г.

Lesson 10. Compound interest-type problems


EXSAMPL:

Suppose £2000 is invested at 10% per annum (year) compound interests. How much money will there be after 2 years?
compound’ interest here means that the interest must be worked out separately for each year.

After 1 year:
Do a new calculation for the interest in the second year.

After 2 year:
EXSAMPL:

A car is bought for £12000. Each year, its value depreciates (goes down) by 5% of its value at the start of the year. How much is the car worth after 2 year?

After 1 year:

loss = 5% of 12000 = 600
value of car = 12000 – 600
= 11400

After 2 year:

loss = 5% of 11400 = 570
value of car = 11400 – 570
= £10830

Simple interest.

This means work out the interest for one year then multiply by the number of year.

EXSAMPL:

£2000 is invested at 10% per annum (year) simple interests. How much money will there be after 2 years?
Using percentage multipliers.

EXSAMPL:

£500 is invested in a bank at 14% per annum compound interest. How much money is in the bank after 5 years?
Use a percentage multiplier

1.14(100% + 14% = 114%)

Now multiply by 1.14 every year to get the new amount.
Start with £500:

after 1 year:

500 × 1.14 = 570

after 2 year:

570 × 1.14 = 649.80

and soon

after 5 year:

total money =
= 962.70729…
= 962.71 (to the nearest penny) 

Tasks to the lesson 10

Other lessons:

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