Commercial arithmetic: compound interest — KCSE Mathematics

KCSE Mathematics · 99 practice questions · 4 syllabus objectives

27 easy34 medium38 hard

What You'll Learn

Key learning outcomes for this topic, aligned to the KNEC KCSE syllabus.

Define compound interest; apply the formula A = P(1 + R/100)ⁿ to calculate the final amount or compound interest

Compare the total amount accrued under simple and compound interest for the same principal, rate and time

Apply the compound interest formula to depreciation: A = P(1 – R/100)ⁿ; solve problems involving reducing value

Commercial arithmetic: compound interest

Sample Questions

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1
easySHORT ANSWER3 marks

A vehicle valued at Ksh 500,000 depreciates at a rate of 15% per annum. Calculate its value after 3 years. (3 marks)

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Part (a) — 3 marks
Use the formula A = P(1 - R/100)^n (1 mk)
Substitute values: A = 500000(1 - 15/100)^3 (1 mk)
Correct final amount calculated as Ksh 308,250 (1 mk)
2
easySHORT ANSWER4 marks

A student deposits Ksh 10,000 in a bank account offering 6% annual compound interest. Determine the total amount in the account after 4 years. (4 marks)

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Part (a) — 4 marks
A = 10000(1 + 0.06)^4 (1 mk)
Calculate the compound interest (1 mk)
Add the principal to the compound interest (1 mk)
Final answer with correct units (1 mk)
3
easySHORT ANSWER3 marks

Calculate the total amount accrued from a principal of Ksh 20,000 at an annual compound interest rate of 5% over 3 years. (3 marks)

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Part (a) — 3 marks
A = 20000(1 + 0.05)^3 (1 mk)
Correct calculation of A (1 mk)
Final answer with correct units (1 mk)
4

A parent invests Ksh 20,000 in an educational fund that compounds interest at a rate of 8% per annum. Determine the compound interest earned after 2 years. (2 marks)

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Master Commercial arithmetic: compound interest for KCSE

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