💷 Percentages and compound interest

Answer key

1. (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.
2. (b) −1% — Method: write each change as a multiplier and multiply them. A 10% fall is × 0.9 and a 10% rise is × 1.1. Working: 0.9 × 1.1 = 0.99, so the final price is 99% of the original, which is 1% less. Answer: an overall change of −1%. The distractors: 0% comes from assuming a 10% fall and a 10% rise cancel — they do not, because the rise is 10% of a smaller amount; +1% has the size right but the sign wrong, from reading the multiplier 0.99 as 1% above 1 instead of 1% below it; −2% comes from finding the 1% fall and then counting it once for each of the two changes.
3. (c) £7617.60 — To decrease by 8% each year, multiply by 0.92 (100% − 8%) twice. £9000 × 0.92 × 0.92 = £7617.60. £7560.00 comes from treating the two 8% decreases as a single flat 16% decrease applied once instead of compounding: £9000 × 0.84 = £7560.00. £8280.00 comes from applying the 8% decrease only once, for 1 year instead of 2: £9000 × 0.92 = £8280.00. £10497.60 comes from multiplying by 1.08 twice, increasing the value instead of decreasing it: £9000 × 1.08 × 1.08 = £10497.60.
4. (c) £47.00 — First apply the 20% reduction: £65 × 0.8 = £52.00. Then take off the further £5: £52.00 − £5 = £47.00. Treating the 20% as a flat £20 rather than a percentage of the price, £65 − £20 − £5, gives £40.00. Applying the 20% reduction correctly but forgetting to take off the extra £5 leaves £52.00. Taking off the £5 first and then applying the 20% reduction to the smaller amount, (£65 − £5) × 0.8, gives £48.00.
5. (c) £672 — Simple interest per year = 3% of £600 = £18. Over 4 years the interest is 18 × 4 = £72. Total in the account = £600 + £72 = £672. A student who gives just the interest, without adding it to the principal, writes £72. A student who adds only one year's interest instead of four gets £600 + £18 = £618. A student who wrongly compounds the interest each year gets 600 × 1.03⁴ = £675.31.
6. (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.
7. (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.)
8. (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.
9. (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.
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. (d) £6705 — After the first year: £6400 × 1.08 = £6912. After the second year: £6912 × 0.97 = £6704.64, which rounds to £6705 (nearest pound). £6720 comes from treating the +8% and −3% changes as a single net +5% change applied to the original amount instead of applying each change in turn: £6400 × 1.05 = £6720. £6912 comes from applying only the first year's growth and stopping there, without applying the second year's fall. £7104 comes from adding the two percentages together as +11% and applying that to the original amount instead of applying each change to the correct starting amount in turn: £6400 × 1.11 = £7104.
12. (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.
13. (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.
14. (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.
15. (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.
16. (c) £480.00 — To decrease by 20%, multiply by 0.80 (100% − 20%). £600 × 0.80 = £480.00. £120.00 comes from working out only the decrease (£600 × 0.20) and forgetting to subtract it from the original value. £580.00 comes from subtracting 20 directly instead of 20% of £600. £720.00 comes from multiplying by 1.20, adding the percentage instead of subtracting it.
17. (b) £300 — The increased price is 110% of the original, so the original price = £330 ÷ 1.1 = £300. A candidate who finds 10% of £330 and subtracts it, wrongly treating £330 as the original, gets £330 − £33 = £297. A candidate who adds 10% of £330 again instead of reversing the increase gets £330 + £33 = £363. A candidate who divides by 0.1 instead of 1.1 gets £3,300.
18. (c) 150 m — Method: a fraction acts as an operator, so finding 3/7 of a length means dividing by the denominator and multiplying by the numerator. Working: 350 ÷ 7 = 50, so one seventh of the route is 50 m, and three sevenths is 50 × 3 = 150 m. Answer: 150 m. The distractors: 50 m comes from finding one seventh and stopping there instead of multiplying by 3; 1050 m comes from multiplying by the numerator without dividing by the denominator, giving 350 × 3 = 1050; 200 m comes from working out the stretch of the route the footpath does not run alongside, which is 4/7 of 350 m, instead of the stretch it does.
19. (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.
20. (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.
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. (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.)