Mammoth Memory


Example – two methods

A Lady put £400 in a savings account for 3 years at 5%. What will she have at the end of 3 years? 


You have two ways of completing this.

First method

Let’s not use a formula let’s just use logic

End of 1st year `=£400=100%`


(See percentages for this method) 

End of 1st year - 








End of 2nd year








End of 3rd year









The lady would have £463.05 at the end of the 3rd year


Second method

Use the formula









The lady will have £463.05 at the end of 3 years.


ExampleInterest per year

A woman invests £2000 in a savings account and this account pays 6% interest per year. How much will she have in the account after nine years to the nearest pound?









After nine years the woman will have £3,379 to the nearest pound in the savings account.


Example - Interest per month

If you invest £1,000 earning 5% compound monthly.

How much will you have after 15 years to the nearest pound?




See how to calculate powers on next page







After 15 years you will have £2,114 to the nearest pound (of this amount £1,000.00 is your initial investment).


Example - Depreciation (Negative interest)

A car cost £8,000 but it depreciates by 9% each year. How much is it worth after 4 years?


The annual interest formula works in exactly the same way





The minus on the interest rate r.







After 4 years the car is only worth £5,486.00


Example - Interest rate quarterly

A lady invests £5,000 in a savings account which compounds the interest quarterly (i.e. 4 times a year), after 5 years how much will the lady have in the account if the interest rate is 8% per year.









The lady will have £7,429.74 at the end of five years.



If this had been compound interest yearly then the answer would have been £7,346.64


Example - Not just for money

A bacteria colony multiplies at the rate of 15% per day. If the colony started with 800 bacteria cells. How many cells would be in the bacteria colony at the end of one week?



Normally t = time is over a year but the period of growth is per day so in this case t = 1 for one day


`n=` once per day too.









There will be 2,128 bacteria cells after one week.


Example – Finding the principal sum

An investment account with a 10% yearly compound interest rate contains £331 at the end of 3 years. What was the initial investment?










The initial investment or starting amount was £248.69


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