This key facts covers Key Facts within Compound Interest for GCSE Mathematics. Revise Compound Interest in Ratio & Proportion for GCSE Mathematics with 12 exam-style questions and 4 flashcards. This topic appears regularly enough that it should still be part of a steady revision cycle. It is section 2 of 6 in this topic. Use this key facts to connect the idea to the wider topic before moving on to questions and flashcards.
Key Facts
| Growth Formula | y = a × (1 + r)ⁿ |
| Decay Formula | y = a × (1 - r)ⁿ |
| a = | Initial amount (starting value) |
| r = | Rate as a decimal (e.g., 5% = 0.05) |
| n = | Number of time periods |
| Multiplier | Growth: (1+r), Decay: (1-r) |
Practice questions for Compound Interest
Which formula correctly calculates the amount A after compound interest at rate r% per year for n years on principal P?
£2,000 is invested for 4 years. - Account A pays 5% simple interest per year. - Account B pays 4.5% compound interest per year. Which account gives more money after 4 years? Show all working.
Quick recall flashcards
Exponential Decay
N = N₀ × (1 - r)^t for decay rate r
Growth vs Decay
Growth: multiply by (1+r). Decay: multiply by (1-r). The multiplier is raised to the power of n (time periods).