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Learn to Calculate Compound Interest, Appreciation, and Depreciation

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Megan Collins

22/01/2023

Maths

Appreciation and Depreciation

Learn to Calculate Compound Interest, Appreciation, and Depreciation

This investment guide explores appreciation and depreciation value calculations, providing depreciation and appreciation examples for investments and explaining how to calculate compound interest over multiple years.

Key points:

  • Defines appreciation, depreciation, and compound interest
  • Provides step-by-step examples for calculating asset values over time
  • Covers various scenarios including real estate, vehicles, and antiques
  • Demonstrates compound interest calculations for investments
...

22/01/2023

314

Appreciation and Depreciation
Appreciation when the value of something
increases
over time.
Depreciation - When the value of something
decre

View

Compound Interest and Complex Depreciation Calculations

This page delves deeper into compound interest calculations and presents more complex scenarios for depreciation calculations. It builds upon the concepts introduced in the previous page, offering more advanced examples.

The page starts with an example of calculating compound interest:

Example: Calculate the compound interest earned on £6,000 at 2.8% for 3 years. Solution: 1.0281.028³ x 6000 = £6,518.24 Interest earned = £6,518.24 - £6,000 = £518.24

This example demonstrates how to calculate compound interest over multiple years, a crucial skill for understanding investment growth.

The page then presents a more complex depreciation scenario:

Example: Jack and Trisha bought a new car for £8,500 in 2009. In the first year, its value depreciated by 20%, in the second year by 15%, and in the third by 10%. Calculate the value of the car at the end of each year.

The solution is broken down year by year:

  1. Year 1: 80% of £8,500 = £6,800
  2. Year 2: 85% of £6,800 = £5,780
  3. Year 3: 90% of £5,780 = £5,202

This example illustrates how to handle varying depreciation rates over multiple years, providing a practical application of depreciation and appreciation examples for investments.

The page concludes with another compound interest example:

Example: Calculate the compound interest earned on £8,000 at 2.2% per annum for 5 years. Solution: 1.0221.022⁵ x 8000 = £8,919.58 Interest earned = £8,919.58 - £8,000 = £919.58

Highlight: When calculating compound interest, always subtract the original amount from the final amount to determine the interest earned.

These examples reinforce the importance of understanding how to calculate compound interest over multiple years and apply depreciation concepts to real-world financial scenarios.

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Maths

314

22 Jan 2023

2 pages

Learn to Calculate Compound Interest, Appreciation, and Depreciation

This investment guide explores appreciation and depreciation value calculations, providing depreciation and appreciation examples for investments and explaining how to calculate compound interest over multiple years.

Key points:

  • Defines appreciation, depreciation, and compound interest
  • Provides step-by-step examples for... Show more

Appreciation and Depreciation
Appreciation when the value of something
increases
over time.
Depreciation - When the value of something
decre

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Compound Interest and Complex Depreciation Calculations

This page delves deeper into compound interest calculations and presents more complex scenarios for depreciation calculations. It builds upon the concepts introduced in the previous page, offering more advanced examples.

The page starts with an example of calculating compound interest:

Example: Calculate the compound interest earned on £6,000 at 2.8% for 3 years. Solution: 1.0281.028³ x 6000 = £6,518.24 Interest earned = £6,518.24 - £6,000 = £518.24

This example demonstrates how to calculate compound interest over multiple years, a crucial skill for understanding investment growth.

The page then presents a more complex depreciation scenario:

Example: Jack and Trisha bought a new car for £8,500 in 2009. In the first year, its value depreciated by 20%, in the second year by 15%, and in the third by 10%. Calculate the value of the car at the end of each year.

The solution is broken down year by year:

  1. Year 1: 80% of £8,500 = £6,800
  2. Year 2: 85% of £6,800 = £5,780
  3. Year 3: 90% of £5,780 = £5,202

This example illustrates how to handle varying depreciation rates over multiple years, providing a practical application of depreciation and appreciation examples for investments.

The page concludes with another compound interest example:

Example: Calculate the compound interest earned on £8,000 at 2.2% per annum for 5 years. Solution: 1.0221.022⁵ x 8000 = £8,919.58 Interest earned = £8,919.58 - £8,000 = £919.58

Highlight: When calculating compound interest, always subtract the original amount from the final amount to determine the interest earned.

These examples reinforce the importance of understanding how to calculate compound interest over multiple years and apply depreciation concepts to real-world financial scenarios.

Appreciation and Depreciation
Appreciation when the value of something
increases
over time.
Depreciation - When the value of something
decre

Sign up to see the contentIt's free!

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Improve your grades

Join milions of students

By signing up you accept Terms of Service and Privacy Policy

Understanding Appreciation and Depreciation

This page introduces the concepts of appreciation and depreciation, along with compound interest calculations. It provides clear definitions and practical examples to illustrate these financial concepts.

Definition: Appreciation is when the value of something increases over time, while depreciation is when the value decreases over time.

Definition: Compound interest refers to calculating the interest added on an investment where it changes every year.

The page presents several examples to demonstrate appreciation and depreciation value calculations:

  1. A flat bought for £14,000 in 2008 appreciated in value by 1.5% each year. The calculation for its value after 5 years is shown using the formula 1.0151.015⁵ x 14,000 = £15,081.31.
  2. Sam bought a car for £6,000 that depreciated at 17% per year. The calculation for its value after 3 years is demonstrated: 0.83³ x £6,000 = £3,430.72.
  3. Jean purchased an antique ring for £200, which appreciates by 10% each year. The value after 10 years is calculated as 1.11.1¹⁰ x 200 = £518.75.

Example: A flat's value after 5 years of 1.5% annual appreciation: 1.0151.015⁵ x £14,000 = £15,081.31

Example: A car's value after 3 years of 17% annual depreciation: 0.83³ x £6,000 = £3,430.72

These examples serve as practical depreciation and appreciation examples for investments, helping readers understand how to apply these concepts to real-world scenarios.

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This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now

Paul T

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The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.

Stefan S

iOS user

This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

Samantha Klich

Android user

Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.

Anna

iOS user

Best app on earth! no words because it’s too good

Thomas R

iOS user

Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.

Basil

Android user

This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.

David K

iOS user

The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!

Sudenaz Ocak

Android user

In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.

Greenlight Bonnie

Android user

very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.

Rohan U

Android user

I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.

Xander S

iOS user

THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮

Elisha

iOS user

This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now

Paul T

iOS user