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Useful Savings Facts & Formulae

A. n. R =. – 1. P. When a principal £ P earns compound interest at an annual rate R for n years, the final amount is:. A = P (1 + R ) n. The annual rate at which a principal £ P would increase to an amount £ P in n years is:. Interest earned in 1 year.

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Useful Savings Facts & Formulae

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  1. A n R= – 1 P When a principal £P earns compound interest at an annual rate R for n years, the final amount is: A = P (1 + R)n The annual rate at which a principal £P would increase to an amount £P in nyears is: Interest earned in 1 year Amount at the beginning of the year  100% Useful Savings Facts & Formulae The amount invested is called the principal AER = The AER corresponding to rate r added n times per year is: R = (1 + r)n – 1

  2. 4.2 R= = 0.042 100 A = P (1 + R)n Example Neil invests £2000 at 4.2% per annum. Calculate the amount after 10 years. A = 2000(1 + 0.042 )10 = 2000x 1.04510 = 3017.916… Amount = £3017.92 (nearest pence)

  3. Interest earned in 1 year b) AER =  100% Amount at the beginning of the year 256.91 =  100% 6000 Kate invests £S at 0.35% per month. Example The amount after nyears isP = S 1.0035 12n a) Kate invests £6000. Find the amount at the end of 1 year. b) Hence find the AER. a) P= 6000  1.003512 = 6256.908… Amount at the end of 1 year = £6256.91 (nearest pence) AER = 4.28%

  4. A n R= – 1 P – 1 4 = 4 4600 – 1 1.31428... R = 3500 – 1 1.07071... = Example An investment of £3500 has grown to £4600 in 4 years. Find the annual percentage rate of interest. = 0.07071... Annual % rate = 7.07% (to 3 sf)

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