This study notes covers Worked Example 2: Depreciation 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 5 of 6 in this topic. Use this study notes to connect the idea to the wider topic before moving on to questions and flashcards.
Worked Example 2: Depreciation
A car worth £12,000 depreciates by 15% per year. What is it worth after 3 years?
Step 1 Identify type and multiplier
Decay (depreciation), so multiplier = 1 - 0.15 = 0.85
Step 2 Calculate
y = 12000 × 0.85³ = 12000 × 0.614125 = £7369.50
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.