💷 Percentages and compound interest

Answer key

1. (a) £3244.80 — A 4% increase each year means the value becomes 100% + 4% = 104% of the previous year's value, and 104% = 1.04, so the multiplier is 1.04. Multiply by 1.04 for each year: £3000 × 1.04 × 1.04 = £3244.80. (£3240.00 comes from using simple interest instead of compound interest: £3000 + 2 × (£3000 × 0.04) = £3240.00. £3120.00 is the value after only 1 year, £3000 × 1.04, forgetting to apply the second year's growth. £244.80 is the interest earned, £3244.80 − £3000, not the total value of the investment.)
2. (a) 75% — Method: to express one quantity as a percentage of another, divide the part by the whole and multiply by 100. Working: 18 ÷ 24 = 0.75, and 0.75 × 100 = 75. Answer: 75%. The distractors: 25% is the percentage she got wrong, 6 out of 24; 133% comes from dividing the whole by the part, 24 ÷ 18; 18% comes from writing the number of correct answers with a percent sign.
3. (a) 20% — Method: percentage increase = increase ÷ original amount × 100. Working: the increase is 84 − 70 = 14 marks, and 14 ÷ 70 = 0.2, so 0.2 × 100 = 20. Answer: an increase of 20%. The distractors: 14% comes from quoting the 14 mark increase as though marks and per cent were the same thing; 17% comes from dividing the 14 by the new mean 84 instead of by the original 70, which gives 17% to the nearest per cent; 120% is the new mean written as a percentage of the old one, which is the whole of the new mean rather than the increase.
4. (a) 50 — Method: 25% is one quarter, so 25% of a quantity is the quantity divided by 4. Working: 200 ÷ 4 = 50. Answer: 50. The distractors: 25 comes from writing the percentage itself as the answer; 100 comes from halving, which is 50% not 25%; 800 comes from multiplying by 4 instead of dividing.
5. (b) 10 — First find 1/4 of 80, which is 20, then find 1/2 of that: 20 ÷ 2 = 10. Adding the two fractions together instead of applying them one after the other, 1/2 + 1/4 = 3/4, and finding 3/4 of 80 gives 60. Finding 1/4 of 80 = 20 correctly but stopping before applying the second fraction leaves 20 as the final answer. Finding 1/2 of 80 = 40 first but forgetting to then find 1/4 of that leaves 40 as the final answer.
6. (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.
7. (c) £338.69 — To increase by 12% each year, multiply by 1.12 twice. £270 × 1.12 × 1.12 = £338.688, which rounds to £338.69 (nearest penny, since the third decimal place is 8). £334.80 comes from treating the two 12% increases as a single flat 24% increase applied once instead of compounding: £270 × 1.24 = £334.80. £302.40 comes from applying the 12% increase only once, for 1 year instead of 2: £270 × 1.12 = £302.40. £338.68 comes from rounding £338.688 down to the nearest penny instead of up.
8. (d) 60 — Method: a percentage acts as an operator, so finding 20% of an amount means multiplying it by 20/100, which cancels to 1/5. Working: 20% = 20/100 = 1/5, and 300 ÷ 5 = 60. Answer: 60 seats. The distractors: 15 comes from reading 20% as one twentieth and working out 300 ÷ 20 = 15; 30 comes from finding 10% of 300 and stopping there instead of doubling it; 6 comes from converting 20% to 0.02 rather than 0.2, giving 0.02 × 300 = 6.
9. (d) 75% — Method: change a fraction to a percentage by dividing the numerator by the denominator and multiplying by 100. Working: 3 ÷ 4 = 0.75, and 0.75 × 100 = 75. Answer: 75%. The distractors: 34% comes from reading the digits 3 and 4 straight off as a percentage; 0.75% comes from dividing but forgetting to multiply by 100; 133% comes from inverting the fraction and working out 4 ÷ 3 instead.
10. (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.
11. (a) 1/4 — The empty part of the tank is 80 − 60 = 20 litres. As a fraction of the full capacity, this is 20/80, which simplifies to 1/4. Finding the fraction of the tank that is FULL instead of empty, 60/80, simplifies to 3/4 — the wrong quantity for the question asked. Writing the empty amount over the amount remaining instead of over the full capacity, 20/60, simplifies to 1/3. Comparing the empty amount to 100 instead of to the tank's actual capacity of 80, 20/100, gives 1/5.
12. (a) £1,000 — Method: find the increase, then add it to the original price; the multiplier 1.25 does both steps at once. Working: 25% is one quarter, so 25% of £800 = £800 ÷ 4 = £200, and £800 + £200 = £1,000. Answer: £1,000. The distractors: £200 is the increase on its own, not the new price; £825 comes from adding £25 to £800, treating the 25% as £25; £600 comes from taking the 25% off the price instead of adding it on.
13. (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.
14. (b) £45 — Since 2/3 of the amount is £30, one third is £30 ÷ 2 = £15, and the whole amount is three thirds: £15 × 3 = £45. Applying the fraction forwards to £30 instead of reversing it, £30 × 2/3 = £20, treats the given amount as the whole rather than as two thirds of it. Finding one third correctly as £15 but forgetting to multiply by 3 to get the whole amount leaves £15 as the final answer. Reading £30 as one third of the amount rather than as two thirds, and so multiplying straight by 3, gives £30 × 3 = £90.
15. (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.
16. (a) £6 — 10% of £40 is £4, and 5% of £40 is half of that, £2. Adding these gives 15% of £40 = £4 + £2 = £6. Finding only the 10% part and stopping there gives £4. Finding only the 5% part and stopping there gives £2. Multiplying 40 by 15 without dividing by 100 gives £600, which treats the percentage as if it were a whole number multiplier.
17. (d) £5.40 — Method: work out the reduced price at each shop separately, then subtract the smaller from the larger. Working: Shop A's reduced price is £45 × 0.8 = £36, and Shop B's reduced price is £34 × 0.9 = £30.60, so the difference is £36 − £30.60 = £5.40. Answer: £5.40. £11.00 comes from comparing the two ORIGINAL prices, £45 − £34, without applying either shop's reduction at all. £1.60 comes from finding Shop A's reduced price correctly, £36, but then subtracting Shop B's original (unreduced) price of £34 instead of its reduced price. £66.60 comes from adding the two reduced prices together, £36 + £30.60, instead of subtracting them.
18. (b) £72 — One fifth of £60 = £12. New price = £60 + £12 = £72. A candidate who gives the increase instead of the new price gets £12. A candidate who subtracts the increase instead of adding it gets £60 − £12 = £48. A candidate who uses 1/4 instead of 1/5 gets £60 + £15 = £75.
19. (d) £33.00 — The profit is 3/8 of £24 = (£24 ÷ 8) × 3 = £3 × 3 = £9.00. Selling price = £24 + £9.00 = £33.00. A candidate who gives the profit instead of the selling price gets £9.00. A candidate who subtracts the profit instead of adding it gets £24 − £9 = £15.00. A candidate who works out one eighth of £24 and adds that on, forgetting to multiply by the numerator 3, gets £24 + £3 = £27.00.
20. (d) 25% — Method: to convert a decimal to a percentage, multiply by 100. Working: 0.25 × 100 = 25. Answer: 25%. The distractors: 0.25% comes from writing a percent sign after the decimal without multiplying; 2.5% comes from multiplying by 10 instead of 100; 250% comes from multiplying by 1000.
21. (a) 2978 — A rise of 6% is a multiplier of 1.06, applied once for each year. After year 1: 2500 × 1.06 = 2650. After year 2: 2650 × 1.06 = 2809. After year 3: 2809 × 1.06 = 2977.54, which is 2978 to the nearest whole number. Multiplying by 1.18 in one go would be wrong, because the second and third years grow from larger numbers than the first.
22. (a) £18 — Method: the percentage acts as an operator on the bill, and 15% can be built from 10% and 5%, where 5% is half of 10%. Working: 10% of £120 is £120 ÷ 10 = £12, and 5% is half of that, £6, so the charge is £12 + £6 = £18. Answer: £18. The distractors: £8 comes from reading 15% as one fifteenth and working out £120 ÷ 15 = £8; £12 comes from finding 10% of the bill and stopping there; £138 comes from finding the charge correctly and then giving the new total, £120 + £18, rather than the charge the question asks for.