Printable · GCSE Higher · ages 14-16
Growth and decay, compound interest worksheet — GCSE Higher
Fifteen questions on "growth and decay, compound interest" — DfE statement R16. Print it, or print three versions so neighbours cannot copy by letter; the key gives the letter for each version.
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Growth and decay, compound interest worksheet — GCSE Higher
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- 1.A patient is given a dose of 200 mg of a drug. Each hour, 30% of the drug remaining in the bloodstream is eliminated, and then a further dose of 50 mg is given. Using the recurrence D_{n+1} = 0.7D_n + 50, with D_0 = 200, work out the amount of drug in the bloodstream after 2 hours.
- 2.A machine is bought for £8500. Its value depreciates by 6% each year. Work out the value of the machine after 3 years, to the nearest pound.
- 3.A process is modelled by the recurrence P_{n+1} = 0.6P_n + 40. As n increases, P_n approaches a long-run value L, which satisfies L = 0.6L + 40. Solve this equation to find L.
- 4.A savings account starts with £500. Each year, 4% interest is added, and then £30 is withdrawn from the account. Which recurrence correctly models the balance, £S_n, after n years, with S_0 = 500?
- 5.A savings account pays 3.5% compound interest each year. Bilal invests £1200. Work out how much interest, in total, he earns after 2 years, to the nearest penny.
- 6.Before a charity campaign, donations were £6400 per month. Donations grew by 8% in the first year after the campaign, and then fell by 3% in the second year as interest faded. Work out the amount donated per month at the end of the second year, to the nearest pound.
- 7.Leah puts £4000 into a savings account paying 3% compound interest each year. At the end of 2 years she takes out all of the money and spends £1500 of it on a laptop. Work out how much of the money she has left.
- 8.A population of fish in a lake is modelled by the recurrence P_{n+1} = 1.1P_n − 30, where P_n is the population after n years, 30 fish are removed by fishing each year, and P_0 = 400. After how many complete years does the population first exceed 460?
- 9.Maya buys a vintage car for £15000. Its value is expected to increase by 4% each year for 2 years. She then plans to sell the car and use £2000 of the money from the sale to buy a trailer. Work out how much money she will have left after selling the car and buying the trailer.
- 10.The value of a rare coin increases by 12% each year. The coin is currently worth £270. Work out the value of the coin after 2 years, giving your answer to the nearest penny.
- 11.A loan of £3000 has interest added at 2% each month, and then a fixed repayment of £200 is made. This is modelled by the recurrence B_{n+1} = 1.02B_n − 200, where B_n is the balance after n months and B_0 = 3000. Work out the balance after 2 months.
- 12.A vehicle is worth £18000. Its value decreases by 15% each year. Using the recurrence V_{n+1} = 0.85V_n, with V_0 = 18000, find the first whole number of years after which the vehicle's value drops below £10000.
- 13.Aisha invests £3200 in Account A, which pays 5% compound interest each year. She also invests £3200 in Account B, which pays 3% simple interest each year. Work out how much more Account A is worth than Account B after 2 years.
- 14.There are 2500 electric cars registered in a town. The number is predicted to increase by 6% each year. Work out the predicted number of electric cars after 3 years, to the nearest whole number.
- 15.A sequence is defined by the iterative rule x_{n+1} = 0.8x_n + 50, with x_0 = 200. Work out x_2, the value of the sequence after two iterations.
Answer key
- (c) 183 mg — Apply the decay, then add the new dose, once for each hour. Hour 1: 0.7 × 200 = 140, then 140 + 50 = 190. Hour 2: 0.7 × 190 = 133, then 133 + 50 = 183, so there is 183 mg after 2 hours. Forgetting the top-up dose and only applying the decay gives 0.7 × 200 = 140, then 0.7 × 140 = 98 — this ignores that a further 50 mg is given every hour. Adding the 50 mg BEFORE the decay is applied, instead of after, gives 0.7 × (200 + 50) = 175, then 0.7 × (175 + 50) = 157.5, which changes how much of the dose is eliminated in the same hour it is given. Multiplying by 0.3, the percentage ELIMINATED, instead of by 0.7, the percentage REMAINING, gives 0.3 × 200 + 50 = 110, then 0.3 × 110 + 50 = 83 — this mixes up the amount that leaves the bloodstream with the amount that stays in it. Always check whether a percentage describes what remains or what is removed before choosing the multiplier.
- (d) £7060 — A 6% decrease each year means the value becomes 100% − 6% = 94% of the previous year's value, and 94% = 0.94, so the multiplier is 0.94. Apply it once for each of the 3 years: £8500 × 0.94 = £7990 after 1 year, £7990 × 0.94 = £7510.60 after 2 years, £7510.60 × 0.94 = £7059.96 after 3 years, which rounds to £7060 to the nearest pound. (£6970 comes from using simple depreciation instead of compound, taking 6% of the original £8500 three times: £8500 − 3 × £510 = £6970. £7990 is the value after only 1 year, forgetting the remaining 2 years. £7511 is the value after only 2 years, £8500 × 0.94² = £7510.60, forgetting the third year.)
- (d) 100 — Rearrange L = 0.6L + 40 by collecting the L terms on one side: L − 0.6L = 40, which gives 0.4L = 40, then L = 40 ÷ 0.4 = 100. Subtracting the other way round, 0.6L − L = 40, gives −0.4L = 40, then L = 40 ÷ (−0.4) = −100 — a sign error that flips the answer negative even though a long-run value here must be positive. Ignoring the 0.6L term completely and solving L = 40 directly gives 40, which throws away the recurrence's own multiplier. Dividing 40 by 0.6 instead of by the correct coefficient 0.4 gives 40 ÷ 0.6 ≈ 66.7, a slip that comes from dividing by the coefficient of L on the RIGHT of the original equation rather than by what is left once the L terms are collected on one side. Always collect the L terms first, then divide by whatever coefficient of L remains.
- (a) S_{n+1} = 1.04S_n − 30 — Adding 4% interest multiplies the balance by 1 + 0.04 = 1.04. Withdrawing £30 afterwards subtracts a fixed 30, giving S_{n+1} = 1.04S_n − 30. Writing +30 instead of −30 mistakes a withdrawal for a deposit — the £30 leaves the account, so it must be subtracted. Writing 0.96 instead of 1.04 treats the 4% as a decrease rather than an increase, as if the interest were shrinking the balance instead of growing it. Writing 1.4 instead of 1.04 turns 4% into 40%, a common slip when converting a percentage to a multiplier — 4% as a decimal is 0.04, so the multiplier is 1.04, not 1.4. Always convert the percentage to a decimal first, then add 1 for growth or subtract from 1 for decay, before applying any fixed amount that is added or removed.
- (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.
- (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.
- (c) £2743.60 — Each year the balance is multiplied by 1.03. After the first year: 4000 × 1.03 = 4120. After the second year: 4120 × 1.03 = 4243.60, so that is what Leah takes out. She then spends £1500 of it, which leaves 4243.60 − 1500 = 2743.60. She has £2743.60 left.
- (b) 5 years — The recurrence P_{n+1} = 1.1P_n − 30 must be applied once per year, checking after each application whether the population has passed 460. Starting from P_0 = 400: 400 × 1.1 − 30 = 410, so P_1 = 410. Then 410 × 1.1 − 30 = 421, so P_2 = 421. Then 421 × 1.1 − 30 = 433.1, so P_3 = 433.1. Then 433.1 × 1.1 − 30 = 446.41, so P_4 = 446.41, which is still below 460. Then 446.41 × 1.1 − 30 = 461.051, so P_5 = 461.051, the first value above 460. The population first exceeds 460 after 5 complete years. Stopping at P_4 = 446.41 and reporting 4 years reports the last year the population was still below 460, not the first year it was above. Counting the starting value P_0 = 400 as a year of growth makes P_5 the sixth number in the list and gives 6 years, but P_0 is the population before any year has passed, so P_5 is reached after 5 years, not 6. Reading "exceed 460" as "exceed the starting population of 400" instead gives P_1 = 410, already above 400, and 1 year — but the threshold named in the question is 460, not the starting value, so always check every value against the number actually stated in the question.
- (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.
- (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.
- (c) £2717.20 — The recurrence B_{n+1} = 1.02B_n − 200 must be applied once for each month, using the previous month's balance each time. Starting from B_0 = 3000: 3000 × 1.02 = 3060, so B_1 = 3060 − 200 = 2860. Then 2860 × 1.02 = 2917.2, so B_2 = 2917.2 − 200 = 2717.2. Stopping after one month leaves B_1 = £2860.00, not the balance after two months. Applying two months of interest together, 1.02² = 1.0404, and 3000 × 1.0404 = 3121.2, and then subtracting 400 in one go, 3121.2 − 400 = 2721.2, does not reproduce the recurrence, because the second month's interest should be earned on the balance after the first repayment, not on the original £3000. Subtracting £200 twice from B_1 without adding a second month of interest, 2860 − 200 = 2660, drops the interest for the second month altogether. The balance after 2 months is £2717.20.
- (d) 4 years — Apply the recurrence repeatedly. V_1 = 0.85 × 18000 = 15300. V_2 = 0.85 × 15300 = 13005. V_3 = 0.85 × 13005 = 11054.25. V_4 = 0.85 × 11054.25 = 9396.1125. V_3 = £11054.25 is still above £10000, but V_4 = £9396.11 has dropped below it, so the answer is 4 years. Stopping at V_3 and calling it '3 years' misreads £11054.25 as already below £10000, or comes from wrongly modelling the fall as a flat £2700 a year (15% of the original value each time, without compounding), which crosses £10000 a year too early. Continuing one extra step to V_5 = 0.85 × 9396.1125 = 7986.70 and calling it '5 years' overshoots, since the value had already dropped below £10000 at V_4. Doubling the percentage decrease to 30% by mistake gives V_1 = 0.7 × 18000 = 12600, then V_2 = 0.7 × 12600 = 8820, which is already below £10000 after only 2 years — the wrong rate crosses the threshold too fast.
- (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.)
- (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.
- (d) 218 — The rule x_{n+1} = 0.8x_n + 50 must be applied once for each step, using the result of the previous step every time — not the same starting value repeated. Starting from x_0 = 200: 0.8 × 200 = 160, so x_1 = 160 + 50 = 210. Then 0.8 × 210 = 168, so x_2 = 168 + 50 = 218. Stopping after one iteration leaves x_1 = 210, not x_2. Applying only the multiplier twice without adding 50 at each step uses 0.8² = 0.64, and 0.64 × 200 = 128, which drops the 50 completely. Adding 50 twice at the end instead of once per step, 128 + 100 = 228, still does not reproduce the actual recurrence, because the 50 added at the first step is itself multiplied by 0.8 at the second step. After two iterations, x_2 = 218.
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