AQA GCSE Maths - Simple & Compound Interest, Growth & Decay

Sep 5, 2026

Revision notes for AQA GCSE Maths focused on interest, growth and decay topics. Covers the meaning of simple interest, how to identify and apply the simple interest formula over a fixed number of years, and how to compute total interest and final amounts. Explains compound interest by treating interest as earned on both principal and accumulated interest, using decimal multipliers and powers. Includes worked examples and shows how depreciation uses the same method as compound interest with percentage decreases over time.

LanguageEnglish

CategoryExam

FormatPDF

Pages11

Reading Time28 min

AccessFree to download

Interest & Depreciation

Simple Interest

Compound Interest

Depreciation

Head to www.savemyexams. com for more awesome resources AQA GCSE Maths Simple & Compound Interest, Growth & Decay Contents Interest & Depreciation Exponential Growth & Decay Page 1 of 11 © 2015 − 2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers Your notes Head to www.savemyexams. com for more awesome resources Interest & Depreciation Simple Interest What is simple interest? Interest is extra money added every year (or month) to an original amount of money Simple interest is interest that is the same amount each time It can be good: for example, putting £100 into a bank account and the bank rewarding you with simple interest of 10% every year After one year you’d have £110 , after two years you’d have £120 ,… It can be bad: for example, owing £100 to a friend and they charge you simple interest of 10% for every year you don’t pay them back After the |rst year you’d owe them £110 , after the second year you’d owe them £120 ,… If £P is your initial amount of money and simple interest is added to it at a rate of R% per year for T years, then the total amount of interest gained, £I, is given by the formula PRTI = 100 Remember that this formula calculates the amount of simple interest added over T years, not the total amount of money after T years To |nd the total amount of money after T years, add the interest £Ito the original amount £P Examiner Tip Exam questions will state “simple interest” clearly in the question, to avoid confusion with compound interest Pay attention to how some questions want the |nal answers (for example, to the nearest hundred) Page 2 of 11 © 2015 − 2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers Your notes Head to www.savemyexams. com for more awesome resources Worked example A bank account oyers simple interest of 8% per year. I put £250 into this bank account for 6 years. Find (a) the amount of interest added over 6 years, (b) the total amount in my bank account after 6 years. (a) Substitute P = 250 , R = 8 and T = 6 into the formulato |nd the simple interest, I The amount of interest over 6 years is £120 (b) The total amount after 6 years is the original amount, £250 , plus the interest from part (a) , £120 250 + 120 The total amount in my bank account after 6 years is £370 Page 3 of 11 © 2015 − 2025 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers Your notes Head to www.savemyexams. com for more awesome resources Compound Interest What is compound interest? Compound interest is where interest is paid on the interest from the previous year (or whatever timeframe is being used) , as well as on the original amount This is diyerent from simple interest where interest is only paid on the original amount Simple interest goes up by the same amount each time whereas compound interest goes up by an increasing amount each time How do you work with compound interest? Keep multiplying by the decimal equivalent of the percentage you want (the multiplier, p) A 25% increase (p = 1 + 0 .25) each year for 3 years is the same as multiplying by 1 .25 × 1 .25 × 1 .25 Using powers, this is the same as × 1 .253 In general, the multiplier p applied n times gives an overall multiplier of pn If the percentages change varies from year to year, multiply by each one in order a 5% increase one year followed by a 45% increase the next year is 1 .05 × 1.45 In general, the multiplier p1 followed by the multiplier p2 followed by the multiplier p3... etc gives an overall multiplier of p1p2p3 ... ⎛ r ⎞n Alternative method: A formula for the |nal ( " after " ) amount is P1 + 100 ⎠⎟ where. . . ...P is the original ( " before " ) amount, r is the % increase, and n is the number of years Note that 1 + ~~ 1~~r~~00~~ is the same value as the multiplier Examiner Tip It is easier to multiply by the decimal equivalent " raised t

FAQs

What is simple interest and how is it applied over several years?

Simple interest adds the same amount each year (or month) to the original amount. Use the simple interest relationship to find total interest over the given time, then add it to the starting principal to get the final amount.

How do you calculate compound interest?

Compound interest pays interest on the interest from the previous period as well as on the original amount. Use the decimal multiplier for the percentage increase and apply it repeatedly, which is represented by powers.

How does depreciation relate to compound interest?

Depreciation is a percentage decrease over time and is calculated using the same process as compound interest. Use a multiplier less than 1 based on the percentage decrease, raise it to the number of time periods, and multiply by the starting value.

Sep 5, 2026

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