SIMPLE & COMPOUND INTEREST

Question 1

Kieran puts £250 into a savings account which gives simple interest at a rate of 7.5% per annum.
How much will Kieran have saved after 3 years.

Answer 1

Every year, 7.5% of £250 will be added as interest to her account.
This is 18.75 a year
18.75x3=56.25
So adding this to the start,
She will have saved £306.25

Question 2

If Thomas Downes borrows £300 from the loanshark Strauss,
Strauss charges 9% simple interest a year.
After 4 years how much will Downes owe?

Answer 2

9x300=2,700
2700/100=27
27x4=108
£108
£108+£300=£408.00

Question 3

If Lester invests £400 at a compound interest rate of 6%, how much interest will he have earned after 3 years.

Answer 3

6% of 400- year 1
=24
Add this
424,
6% of 424
6x424=2,544
2544/100=25.44
£25.44
Add again
25.44+ 424=449.44
6% of 449.44
449.44x6=2,696.64/100=26.966
26.97
So add each one,
24+25.44+26.97=76.41
400+76.41=476.41