💷 Percentages and compound interest

Answer key

1. (b) £52,000 — Method: convert 130% to a decimal multiplier and multiply it by last year's profit. Working: 130% = 1.3, so this year's profit is £40,000 × 1.3 = £52,000. Answer: £52,000. £12,000 comes from using only the extra 30% (130% − 100%) and forgetting to include the original 100%, £40,000 × 0.3 = £12,000. £40,130 comes from simply adding 130 onto £40,000, treating the percentage as an amount of money rather than a multiplier. £5,200 comes from misreading 130% as 13%, giving £40,000 × 0.13 = £5,200.
2. (b) 4% — Method: find the total interest earned, share it equally across the number of years to find one year's interest, then write it as a percentage of the amount invested. Working: total interest = £840 − £750 = £90, so one year's interest is £90 ÷ 3 = £30, and £30 as a percentage of £750 is (£30 ÷ £750) × 100 = 4%. Answer: 4%. 12% comes from treating the total interest of £90 as if it were earned in a single year, (£90 ÷ £750) × 100 = 12%, forgetting to divide by 3 years. 0.04% comes from finding the correct decimal, £30 ÷ £750 = 0.04, but forgetting to multiply by 100 to convert it into a percentage. 112% comes from writing the final amount, £840, as a percentage of the amount invested, £750, without first subtracting the £750 to find the interest alone.
3. (c) £136 — 5% interest each year means the value becomes 100% + 5% = 105% of the previous year's value, and 105% = 1.05, so the multiplier is 1.05. Account A: £3200 × 1.05 × 1.05 = £3528. Account B (simple interest): £3200 + 2 × (£3200 × 0.03) = £3392. The difference is £3528 − £3392 = £136. (£128 comes from working out Account A with simple interest too, instead of compound: £3200 + 2 × (£3200 × 0.05) = £3520, then £3520 − £3392 = £128. £3528 is the value of Account A on its own, not the difference between the two accounts. £3392 is the value of Account B on its own, not the difference.)
4. (c) £840 — Method: find the total amount raised using the reverse percentage, then subtract the entry fees to find the donations. Working: £1,260 is 60% of the total, so the total is £1,260 ÷ 0.6, and subtracting the entry fees from this total leaves £840 raised through donations. Answer: £840. £2,100 comes from correctly finding the total amount raised but then forgetting to subtract the entry fees, giving the total instead of the donations alone. £504 comes from working out 40% of the entry fees themselves, £1,260 × 0.4 = £504, instead of first finding the total amount raised. £1,890 comes from treating £1,260 as 40% of the total instead of 60%, dividing by 0.4 to get a total of £3,150, and then subtracting the entry fees from that incorrect total.
5. (c) 150 — Since 90 students represent 3 of the 5 equal parts, one part is 90 ÷ 3 = 30, and the whole year group is five parts: 30 × 5 = 150. Applying the fraction forwards to 90 instead of reversing it, 90 × 3/5 = 54, treats the given number as the whole rather than as three fifths of it. Finding one part correctly as 30 but forgetting to scale up to the whole year group leaves 30 as the final answer. Treating 90 as the whole year group and adding on 2/5 of 90 for the students who do not walk, 90 + (90 × 2/5) = 126, applies the missing fraction to the wrong base amount.
6. (c) £624.32 — A 4% rise is a multiplier of 1.04, applied once each year. After year 1: 5000 × 1.04 = 5200. After year 2: 5200 × 1.04 = 5408. After year 3: 5408 × 1.04 = 5624.32. The question asks for the interest, not the value of the account, so take away the amount invested at the start: 5624.32 − 5000 = 624.32. The total interest earned is £624.32.
7. (b) £2205.00 — With compound interest each year's interest is worked out on the value at the start of that year, so a 5% rise is a multiplier of 1.05 applied once per year. After the first year: 2000 × 1.05 = 2100. After the second year: 2100 × 1.05 = 2205. The question asks for the value of the investment, not for the interest earned, so the answer is £2205.00.
8. (b) 30 — Method: 12% of an amount is 12/100 of it, so find 1% by dividing by 100 and then multiply by 12. Working: 1% of 250 is 250 ÷ 100 = 2.5, and 12% is 2.5 × 12 = 30. Answer: 30 seats. The distractors: 3 comes from writing 12% as 0.012 instead of 0.12, giving 0.012 × 250 = 3; 25 comes from finding 10% of the seats and stopping there; 24 comes from counting 12 seats for each whole hundred, 12 + 12 = 24, and ignoring the remaining 50 seats.
9. (b) 80% — Percentage = (40 ÷ 50) × 100 = 80%.
10. (d) 2748 — A 7% increase each year means the value becomes 100% + 7% = 107% of the previous year's value, and 107% = 1.07, so the multiplier is 1.07. Multiply by 1.07 for each of the 2 years: 2400 × 1.07 × 1.07 = 2747.76, which rounds to 2748. (2736 comes from using simple growth instead of compound: 2400 + 2 × (2400 × 0.07) = 2736. 2568 is the population after only 1 year, 2400 × 1.07, forgetting the second year's growth. 2747 comes from rounding 2747.76 down instead of up to the nearest whole number.)
11. (c) £478.40 — Method: apply the percentage increase, then apply the percentage decrease to the new price. Working: after the increase, the laptop costs £520 × 1.15. Multiplying this result by 0.80 gives the final price, £478.40. Answer: £478.40. £494 comes from combining the two percentages into a single net change (15% − 20% = −5%) and applying it directly, £520 × 0.95 = £494, instead of applying the two changes one after the other. £416 comes from applying only the 20% decrease to the original price, £520 × 0.80 = £416, forgetting the increase entirely. £598 comes from applying only the 15% increase and stopping there, forgetting to apply the decrease at all.
12. (c) £70 — Method: 20% of an amount is 20/100 of it; a reliable route is to find 10% by dividing by 10 and then double it. Working: 10% of £350 is £350 ÷ 10 = £35, and 20% is twice as much, £35 × 2 = £70. Answer: £70. The distractors: £35 comes from finding 10% and stopping there; £17.50 comes from reading 20% as one twentieth and working out £350 ÷ 20 = £17.50; £280 comes from taking 20% off the money raised rather than finding 20% of it, giving £350 ÷ 5 = £70 and then £350 − £70 = £280.
13. (d) 19% — Method: write each decrease as a multiplier, multiply the multipliers, then compare the result with 100%. Working: a 10% decrease is a multiplier of 0.9, so the two reductions together give 0.9 × 0.9 = 0.81; the final price is 81% of the original, so the price has fallen by 100% − 81% = 19%. Answer: an overall decrease of 19%. The distractors: 20% comes from adding the two reductions, 10% + 10%, which charges the second 10% against the original price instead of against the already reduced price; 21% comes from using the increase multiplier by mistake, since 1.1 × 1.1 = 1.21, and reading that 21% as a decrease; 81% is the percentage of the original price still being paid, not the percentage taken off.
14. (a) 20% — Method: a percentage is a number of parts per hundred, so divide the numerator by the denominator and multiply by 100. Working: 1 ÷ 5 = 0.2, and 0.2 × 100 = 20; the same result comes from scaling 1/5 to 20/100. Answer: 20%. The distractors: 5% comes from reading the denominator 5 straight off as the percentage; 25% comes from confusing 1/5 with 1/4, the fraction met most often in percentage work; 50% comes from a place value slip in the division, writing 1 ÷ 5 as 0.5 instead of 0.2.
15. (d) 36 — To find 3/8 of 96, divide by the denominator and multiply by the numerator: 96 ÷ 8 = 12, and 12 × 3 = 36. Dividing 96 by the numerator instead of the denominator, 96 ÷ 3 = 32, uses the wrong part of the fraction. Using 3/4 instead of 3/8, perhaps misreading the denominator, gives 96 × 3/4 = 72. Finding 96 ÷ 8 = 12 correctly but forgetting to multiply by the numerator 3 leaves just 12 as the final answer.
16. (b) 3.5 — Method: work out each percentage of its number separately, then subtract the smaller result from the larger one. Working: 45% of 70 = 31.5, and 35% of 80 = 28, so the difference is 31.5 − 28 = 3.5. Answer: 3.5. 11.5 comes from pairing the percentages with the wrong numbers, working out 35% of 70 = 24.5 and 45% of 80 = 36, and finding their difference. 59.5 comes from adding the two correct results, 31.5 + 28, instead of subtracting them. 10 comes from simply subtracting the two percentages themselves, 45 − 35, without applying them to the numbers at all.
17. (a) £14224 — Value after 2 years: £15000 × 1.04 × 1.04 = £16224. Money left after buying the trailer: £16224 − £2000 = £14224. £14200 comes from treating the two 4% increases as a single flat 8% increase applied once instead of compounding: £15000 × 1.08 = £16200, and £16200 − £2000 = £14200. £13600 comes from applying the 4% increase only once, for 1 year instead of 2: £15000 × 1.04 = £15600, and £15600 − £2000 = £13600. £18224 comes from adding the £2000 instead of subtracting it: £16224 + £2000 = £18224.
18. (b) 7980 — After the first year: 8000 × 0.95 = 7600. After the second year: 7600 × 1.05 = 7980. 8000 comes from assuming a 5% decrease followed by a 5% increase returns exactly to the starting number — it does not, because the increase acts on the smaller, already-reduced number. 8400 comes from applying only the second year's 5% increase to the original number: 8000 × 1.05 = 8400. 7600 comes from applying only the first year's 5% decrease and stopping there, without applying the second year's increase.
19. (a) £85.47 — Value after 2 years: £1200 × 1.035 × 1.035 = £1285.47 (nearest penny). Interest earned = £1285.47 − £1200 = £85.47. £1285.47 is the total value of the account, not the interest earned on top of the original £1200. £84.00 comes from using simple interest instead of compound interest: £1200 × 0.035 × 2 = £84.00. £42.00 comes from working out only the first year's interest and stopping there: £1200 × 0.035 = £42.00.
20. (d) 25% — Method: percentage decrease = decrease ÷ original amount × 100. Working: the reduction is £60 − £45 = £15, and 15 ÷ 60 = 0.25, so 0.25 × 100 = 25%. Answer: 25%. The distractors: 15% comes from quoting the £15 reduction as though pounds and per cent were the same thing; 33% comes from dividing the £15 by the new price £45 instead of by the original £60, which gives 33% to the nearest per cent; 75% is the new price written as a percentage of the old one, which is what is still paid rather than what has been taken off.
21. (c) 20% — Method: percentage increase = (increase ÷ original) × 100. Working: the increase is 54 − 45 = 9, and 9 ÷ 45 = 0.2, so the percentage increase is 0.2 × 100 = 20. Answer: 20%. The distractors: 9% comes from writing the actual increase as a percentage; 16.7% comes from dividing by the new value 54 instead of the original 45; 120% is the multiplier 1.2 written as a change rather than the change itself.
22. (b) 460 — To increase by 15%, multiply by 1.15 (100% + 15%). 400 × 1.15 = 460. 60 comes from working out only the increase, 400 × 0.15 = 60, and forgetting to add it to the original number. 415 comes from adding 15 directly to 400 instead of 15% of 400. 340 comes from multiplying by 0.85, decreasing instead of increasing: 400 × 0.85 = 340.