R

Bonds (Simple Interest)

For each of the bonds below calculate how much interest will be earned in total and how
much you would have in total at the end.

Example: The Kiwi bond costs £680 and pays interest at 8% for 4 years.

Each year you would earn 8% of £680 = £54.40 (680 x 0.04)

In total you would earn that 4 times which is £54.40 x 4 = £217.60

The total you would have at the end is your initial investment (£680) + the
interest (£217.60) which is £897.60

Amount
Bond Interest Time Interest Earned Final Amount
Invested

250 x 0.1 = ......... 250 + 75

Apple Bond 250 10% 3
25 x 3 = ........... = ..............
Banana Bond 620 15% 5

Cherry Bond 800 8% 6

Date Bond 1400 6% 8

Elderberry
2900 3% 11
Bond
Fig Bond 4000 4.50% 7

Grape Bond 2000 1.50% 4

Huckleberry
1500 5.50% 8
Bond

Extension: The Lemon Bond and the Lime Bond are both 5 year bonds. The Lemon
Bond pays interest at a rate of 4% per year. The lime bond pays 3% interest
for the first three years but then pays 5.6% for the last two.

Which bond gives you the better returns?

A
Bonds and Bank Accounts
The table below lists 4 bonds along with their details. For each one calculate how much
interest will be earned in total and how much you would have in total at the end.

Amount
Bond Interest Time Interest Earned Final Amount
Invested
Elderberry 2900 x 0.03 = ........ 2900 + 627
2900 3% 11
Bond 57 x 11 = .......... = .................
Fig Bond 4000 4.50% 7

Grape Bond 2000 1.50% 4

Huckleberry
1500 5.50% 8
Bond
In a savings account any interest you earn automatically gets put back into the account. This
new amount is then used to calculate how much interest you get next year. This is known as
compound interest.

Example: A bank account pays 3% interest, compounded yearly.

If you save £500, at the end of the first year you would have £515 in your
account (£500 x 1.03).

At the end of the second year you would have £530.45 as you would add on
3% of £515 (£515 x 1.03).

Complete the table below to show how much would be in the account after each year.

Interest
Bank Amount
(per After 1 Year After 2 Years After 3 Years
Account Invested
year)
£400 x 1.04 = £416 x 1.04 =
Ruby £400 4% £416

Sapphire £450 3%

Gold £170 2%

Platinum £200 1.5%

G
Bank Accounts
The Lemon Bond and the Lime Bond are both 5 year bonds. The Lemon Bond pays simple
interest at a rate of 4% per year. The Lime bond pays 3% simple interest for the first three
years but then pays 5.6% for the last two.

Which bond gives you the better returns?

In a savings account any interest you earn automatically gets put back into the account. This
new amount is then used to calculate how much interest you get next year. This is known as
compound interest.

Complete the table below to show how much would be in the account after each year.

Interest
Bank Amount
(per After 1 Year After 2 Years After 3 Years
Account Invested
year)
£400 x 1.04 =
Ruby £400 4% £416

Sapphire £450 3%

Gold £170 2%

Platinum £200 1.5%

Silver £4500 2.5%

Diamond £1800 3.7%

Opal £325 0.25%

Extension: Terry wants to invest £5000 for 6 years in an account that pays compound
interest at a rate of 4% per year.

What single calculation could Terry do to work out how much he would
have in the account at the end of that time?
 Answer Sheet

Amount
Bond Interest Time Interest Earned Final Amount
Invested

Apple Bond 360 10% 5 £75.00 £325.00

Banana Bond 420 12% 6 £465.00 £1,085.00
Cherry Bond 500 15% 9 £384.00 £1,184.00
Date Bond 1200 5% 12 £672.00 £2,072.00
Elderberry
Bond
2400 4% 7 £957.00 £3,857.00
Fig Bond 3500 2.5% 6 £1,260.00 £5,260.00
Grape Bond 3600 3.5% 5 £120.00 £2,120.00
Huckleberry
Bond
3000 1.5% 9 £660.00 £2,160.00

Interest
Bank Amount
(per After 1 Year After 2 Years After 3 Years
Account Invested
year)

Ruby £400 4% £416.00 £432.64 £449.95

Sapphire £450 3% £463.50 £477.41 £491.73

Gold £170 2% £173.40 £176.87 £180.41

Platinum £200 1.5% £203.00 £206.05 £209.14

Silver £4500 2.5% £4,612.50 £4,727.81 £4,846.01

Diamond £1800 3.7% £1,866.60 £1,935.66 £2,007.28

Opal £325 0.25% £325.81 £326.63 £327.44