How to work out interest

A short video showing how to work out interest.

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Click to see a step-by-step slideshow.
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WHAT YOU NEED: whiteboard, marker pen, calculator and ruler.
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STEP 1: Draw two bars. Label the top bar £20 and shade it in. Shade the bottom bar in and label it 100%.
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STEP 2: Estimate what 5% would look like and add this area to both bars. On the bottom bar, label this area 5%. Label the whole of the top bar with a question mark. Label the whole of the bottom bar 105%.
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STEP 3: Convert the percentages to decimals by dividing by 100. On the bottom bar, change the 105% label to 1.05 and change the 5% label to 0.05. Label the end of the original bottom bar 1.
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STEP 4: Multiply the amount of money by the decimal to find the value with added interest. Here it is £20 × 1.05. Before using a calculator can you estimate the answer in your head?
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Well done! You've now worked out that the total with interest is £21.

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