CAIE IGCSE Mathematics Simple and Compound Interest

Practise calculating simple or compound interest, final investment values and unknown annual or daily rates over a stated number of periods.

Exam points

calculate simple interest as principal × rate × time ÷ 100 and add it when final value is required
calculate compound value with principal × (1 + rate ÷ 100)^number of periods
take the appropriate root of final value ÷ principal to recover an unknown compound rate

[Maximum number: 7]

(a)

Dean invests $\$ 500$ for 10 years at a rate of $1.7 \%$ per year simple interest.

Calculate the total interest earned during the 10 years.
$

[ 2 ]

85
M1 for $\frac{500\times1.7\times10}{100}$ .

(b)

Ollie invests $\$ 200$ at a rate of $0.0035 \%$ per day compound interest.

Calculate the value of Ollie's investment at the end of 1 year.
[1 year = 365 days.]
$

[ 2 ]

203 or 202.5 to 202.6
M1 for $200\left(1+\frac{0.0035}{100}\right)^{365}$ .

(c)

Edna invests $500 at a rate of r % per year compound interest.

At the end of 6 years, the value of Edna's investment is $ 559.78.
Find the value of r.

[ 3 ]

1.9
M2 for $\sqrt[6]{\frac{559.78}{500}}$ oe, or M1 for $500\left(1+\frac{r}{100}\right)^6=559.78$ .

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E1.13.4 Calculate with simple and compound interest. question 1

Question (a)

Question (b)

Question (c)