#### Revision Notes

##### What is compound interest?

Compound Interest is where interest is paid on the interest from the year (or whatever time frame is being used) before as well as on the original amount.

(This is different from Simple Interest where Interest is only paid on the original amount.)

##### How do you work with compound interest?

For COMPOUND changes (can be a decrease as well as an increase):

Keep multiplying by the decimal equivalent of the percentage you want.

Otherwise do the same as normal:

Identify “before” & “after” quantities

1. FIND percentage we want:
• Increase – ADD percentage to 100
• Decrease – SUBTRACT from 100
2. Write down a STATEMENT connecting “before” and “after”:
“after is a percentage of before”
3. Write down the statement as an EQUATION using decimal equivalent
remember “is” means “=”
4. SUBSTITUTE and SOLVE

#### Example

Final Value = £1378 (to the nearest £)

## Want to aim for a Level 9?

See if you’ve got what it takes. Test yourself with our topic questions.

### Author: Simon

After 24 years teaching A Level Further Maths, Maths whizz Simon focused his attention on tutoring. He’s helped thousands of young people make sense of Maths and now he’s helping you too – aren’t you lucky! He’s even worked as an Edexcel examiner, so knows exactly what they’re looking for.