A car worth Ā£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 Ć 0.85Ā³ = 12000 Ć 0.614125 = Ā£7369.50
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.
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?
Ā£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.