compound interest/decay

compound interest/decay

1. Interest

   • Option 1
     • First times the amount with the percentage
       • Mike has £750 in the bank he keeps the money in the bank at 5% compound interest for 3 years
         • 750 x 5 %= 750 x 0.05= 37.50
           • Then add the starting number to the new number
             • 750 + 37.50 = 787.50
               • Then repeat this process with the new number
                 • 787.50 x 5% = 39.38+ 787.50 = 826.88
                   • 826.88 x 5% = 41.34 + 826.88= 868.22
                     • Awnser = 868.22
   • Option 2: calculator
     • 750 x 5%to the power of 3 = 862.50

2. Decay

   • First times the starting number with the percentage or the percentages decimal
     • 2000 x 2% = 2000 x (100% - 2%) = 2000 x 98% = 200 x 0.98 = 196
       • 2000-196=1804
         • 1804x 0.98= 1062.32
           • 1084-1062.32= 21.68
             • 21.68 x 0.98= 21.25
               • 21.68-21.25= 0.43
   • 2000x 0.98 to the power of 3
     • = 1882.38