Growth and decay, compound interest worksheet — GCSE Higher

1.A trust fund contains £8000. Each year, 5% interest is added, and then £600 is paid out to a charity. Work out the amount remaining in the fund after 2 years.

2.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.

3.The concentration of a pollutant in a lake, in arbitrary units, follows the recurrence C_{n+1} = 0.75C_n + 40, with C_0 = 500: each week, 25% of the pollutant breaks down naturally, and then a further 40 units enter the lake from run-off. An ecologist classifies the lake as safe once C_n first drops below 300. Find the first whole number of weeks after which the lake is safe.

4.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.

5.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.

6.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.

7.A sequence is defined by the iterative rule x_{n+1} = 0.5x_n + 20, with x_0 = 0. By working out x_1, x_2 and x_3, find the value that the sequence is approaching.

8.A laptop costs £800 when new. Its value decreases by 25% of its value at the start of each year. Work out how much value the laptop loses in the second year.

9.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.

10.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.

11.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.

12.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.

13.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.

14.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.

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.