Percentage change - WJECSimple appreciation and depreciation
Percentages can be used to increase or decrease a quantity relative to its size. Shops reduce their goods by a percentage and the government increases the cost of goods by adding on a percentage tax.
When undertaking calculations with simple appreciation and depreciation, the value remains fixed each year.
Example
Anita invests 拢300 in her savings account. Each year she earns 2.5% simple interest per annumEach year, annually, which is paid into a separate account. She leaves this money in her account for five years. How much interest does she earn in total and how much money does she now have in total?
Solution
1. Calculate one year鈥檚 interest:
拢300 梅 100 脳 2.5 = 拢7.50.
2. Multiply this by the number of years of investment:
拢7.50 脳 5 = 拢37.50.
Anita now has 拢337.50.
Question
Evan takes out a loan of 拢1,000 for three years. Simple interest is charged at 8% pa (per annum). How much will he have paid back at the end?
One year鈥檚 interest: 拢1,000 梅 100 脳 8 = 拢80.
Three year鈥檚 interest: 3 脳 拢80 = 拢240.
Total paid: 拢1,000 + 拢240 = 拢1,240.
Question
Phones For Phones release a new handset each year. As a result, previous models depreciate (decrease) in value by 20% of the original price. How much would a phone costing 拢200 be worth after three years?
1. Calculate 20% of the original value:
拢200 梅 100 脳 20 = 拢40.
2. Multiply this by the number of years:
拢40 脳 3 = 拢120.
3. Subtract this from the original value:
拢200 鈭 拢120 = 拢80.
A phone costing 拢200 would be worth 拢80 after three years.