Using an iterative financial process
A recurrence uses the previous balance to calculate the next one.
- A recurrence uses the previous balance to calculate the next one.
- Read the order: interest followed by a withdrawal gives next balance =
× current balance − withdrawal. - Keep unrounded values between steps unless the question explicitly says the bank rounds each period.
Example 1
A savings account starts at £500. Each year it earns 2% interest, then £30 is withdrawn. Find the balance after 3 years. Do not round between years; round only the final answer to the nearest penny.
Example 2
A savings account starts at £525. Each year it earns 3% interest, then £31 is withdrawn. Find the balance after 3 years. Do not round between years; round only the final answer to the nearest penny.
Remember
Use the worked steps to check your method, not just the final answer.
Your turn
A savings account starts at £550. Each year it earns 4% interest, then £32 is withdrawn. Find the balance after 3 years. Do not round between years; round only the final answer to the nearest penny.
Check answer
A savings account starts at £575. Each year it earns 5% interest, then £33 is withdrawn. Find the balance after 3 years. Do not round between years; round only the final answer to the nearest penny.
Check answer
A savings account starts at £600. Each year it earns 6% interest, then £34 is withdrawn. Find the balance after 3 years. Do not round between years; round only the final answer to the nearest penny.
Check answer
A savings account starts at £625. Each year it earns 2% interest, then £35 is withdrawn. Find the balance after 3 years. Do not round between years; round only the final answer to the nearest penny.
Check answer
A savings account starts at £650. Each year it earns 3% interest, then £36 is withdrawn. Find the balance after 3 years. Do not round between years; round only the final answer to the nearest penny.
Check answer
A savings account starts at £550. Each year it earns 4% interest, then £32 is withdrawn. Find the balance after 3 years. Do not round between years; round only the final answer to the nearest penny.
AnswerA savings account starts at £575. Each year it earns 5% interest, then £33 is withdrawn. Find the balance after 3 years. Do not round between years; round only the final answer to the nearest penny.
AnswerA savings account starts at £600. Each year it earns 6% interest, then £34 is withdrawn. Find the balance after 3 years. Do not round between years; round only the final answer to the nearest penny.
AnswerA savings account starts at £625. Each year it earns 2% interest, then £35 is withdrawn. Find the balance after 3 years. Do not round between years; round only the final answer to the nearest penny.
AnswerA savings account starts at £650. Each year it earns 3% interest, then £36 is withdrawn. Find the balance after 3 years. Do not round between years; round only the final answer to the nearest penny.
Answer