Compound Interest - an Introduction
Interactive practice questions
$£3000$£3000 is invested at $4%$4% p.a., compounded annually. The table below tracks the growth of the principal over three years.
| Time Period $n$n (years) | Value at beginning of time period | Value at end of time period | Interest earned in time period |
|---|---|---|---|
| $1$1 | $£3000$£3000 | $\text{A}$A | $\text{B}$B |
| $2$2 | $\text{C}$C | $£3244.80$£3244.80 | $\text{D}$D |
| $3$3 | $£3244.80$£3244.80 | $£3374.59$£3374.59 | $\text{E}$E |
What value should go in cell $\text{A}$A?
What value should go in cell $\text{B}$B?
What value should go in cell $\text{C}$C?
What value should go in cell $\text{D}$D?
What value should go in cell $\text{E}$E?
What is the total interest earned over the three years?
Dave's investment of $£6000$£6000 earns interest at $2%$2% p.a, compounded annually over $3$3 years.
Answer the following questions by repeated multiplication.
A $£2090$£2090 investment earns interest at $4.2%$4.2% p.a. compounded annually over $17$17 years. Use the compound interest formula to calculate the value of this investment to the nearest penny.