6.4 Simple and compound interest — Practise

Work independently. Questions and answers below come from checked practice records.

1. £500 is invested at 4% simple interest each year for 3 years. Work out the interest.
2. £750 is invested at 2% simple interest each year for 5 years. Work out the final amount.
3. £600 is invested at 5% compound interest for 2 years. Work out the final amount.
4. Write the multiplier for 3% interest, compounded yearly.
5. Find the final amount for £1000 at 6% for 2 years using simple interest, then compound interest.
6. £2400 is invested at 3.5% simple interest for 4 years. Work out the interest and final amount.
7. £1250 is invested at 2.4% compound interest for 3 years. Give the final amount to the nearest penny.
8. A savings account pays 4% compound interest. Work out the balance of £800 after 4 years.
9. Explain why compound interest gives more than simple interest after several years at a positive rate.
10. £900 is invested at 3% compound interest for 5 years. Work out the increase in value to the nearest penny.