Forgetting to convert percentage to decimal
"The Percentage Slip"
The Mistake in Action
Find the value of £500 after 4 years at 8% compound interest.
Wrong: $500 \times (1 + 8)^4 = 500 \times 9^4 = 3,280,500$
Why It Happens
Students put the percentage directly into the formula without dividing by 100.
The Fix
The formula uses $\frac{r}{100}$ to convert the percentage to a decimal.
8% = 0.08, so multiplier = $1 + 0.08 = 1.08$
Correct: $500 \times (1.08)^4 = 500 \times 1.3605 = £680.24$
Quick check: Your answer should be reasonable. £3 million from £500 is clearly wrong!
Spot the Mistake
Can you identify where this student went wrong?
8% compound interest
$(1 + 8)^4 = 9^4$
Click on the line that contains the error.
Related Topics
Learn more about the underlying maths: