IGCSE Mathematics: Money, Interest and Exchange Rates Practice Questions
Simple interest adds the same amount each year and is found with principal times rate times time divided by 100. Compound interest applies a multiplier repeatedly, so the balance grows faster each year.
Topic 1.15 of Cambridge IGCSE Mathematics 0580 puts percentages into a financial context, and exchange rate questions test whether you multiply or divide. Writing down which currency you are converting to first removes most of the risk. The questions below cover all four cases.
What you need to know for Money, Interest and Exchange Rates
- Simple interestI = PRT divided by 100, where P is the principal, R the annual rate and T the time in years. The same interest is added each year.
- Compound interestFinal amount = P x (1 + R divided by 100) raised to the power T. Interest is earned on interest already added.
- DepreciationA compound decrease, usually of a vehicle or equipment. Use a multiplier below 1 raised to the number of years.
- Exchange ratesWrite the rate as an equation, for example 1 USD = 4.20 MYR, then decide whether to multiply or divide so the unwanted unit cancels.
- Rounding moneyRound to 2 decimal places for currency unless told otherwise. State the currency symbol in the final answer.
- Profit and lossPercentage profit is profit divided by cost price, multiplied by 100. The cost price, not the selling price, is the denominator.
IGCSE Mathematics Money, Interest and Exchange Rates questions and answers
4 exam-style questions written to the 0580 syllabus. Try each one on paper first, then open the worked answer to check your method against the marks.
RM2000 is invested at 5 per cent per year simple interest for 4 years. Calculate the interest earned.
Show the worked answer
- Use I = PRT divided by 100, with P = 2000, R = 5 and T = 4.
- I = 2000 x 5 x 4 divided by 100.
- 2000 x 5 = 10000, and 10000 x 4 = 40000.
- 40000 divided by 100 = RM400. The interest is RM100 per year, added four times.
Compare RM2000 invested for 3 years at 5 per cent simple interest with the same amount at 5 per cent compound interest. Calculate the difference in the total interest earned.
Show the worked answer
- Simple interest: I = 2000 x 5 x 3 divided by 100 = RM300.
- Compound interest: final amount = 2000 x 1.053.
- 1.053 = 1.157625, so the final amount is RM2315.25.
- Compound interest earned = 2315.25 minus 2000 = RM315.25.
- Difference = 315.25 minus 300 = RM15.25. Compound interest is larger because each year's interest is earned on a bigger balance.
The exchange rate is 1 USD = 4.20 MYR. Convert RM1050 into US dollars.
Show the worked answer
- Write the rate as an equation: 1 USD = 4.20 MYR.
- The starting amount is in ringgit and the answer must be in dollars, so divide by 4.20 to cancel the ringgit.
- 1050 divided by 4.20 = 250.
- The answer is USD 250. Check by converting back: 250 x 4.20 = RM1050.
A car bought for RM80000 depreciates by 15 per cent each year. Calculate its value after 3 years, correct to the nearest ringgit.
Show the worked answer
- A 15 per cent decrease means the value each year is 85 per cent of the year before, so the multiplier is 0.85.
- Depreciation is compound, so apply the multiplier once per year: value = 80000 x 0.853.
- 0.853 = 0.614125.
- Value = 80000 x 0.614125 = RM49130. The total loss is RM30870, which is more than 15 per cent of the original but less than 45 per cent.
Common mistakes in this topic
- Applying a compound percentage as a single multiplied percentage.
- Multiplying instead of dividing in a currency conversion.
- Giving the total amount when only the interest is required.
- Using the selling price as the denominator for percentage profit.
- Rounding money to more or fewer than 2 decimal places without being asked.
Exam tips
- Write the exchange rate as an equation, then check which unit cancels. That decides multiply or divide.
- Sense check currency answers against the relative value of the two currencies.
- For compound growth or decay, the exponent is always the number of years.
- Label your answer with the correct currency symbol. It is sometimes worth a mark.
- Percentage profit uses the cost price on the bottom, never the selling price.
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Money, Interest and Exchange Rates FAQs
What is the simple interest formula?
Interest equals principal multiplied by rate multiplied by time, all divided by 100. The rate is the annual percentage and the time is in years. Because it is always calculated on the original principal, the same amount of interest is added every year.
How do I convert between currencies?
Write the exchange rate as an equation such as 1 USD equals 4.20 MYR, then choose to multiply or divide so that the unit you are starting with cancels out. Check the answer against the relative value of the currencies to confirm the direction is right.
How does depreciation work?
Depreciation is a compound decrease. If a value falls by 15 per cent each year, multiply by 0.85 once for every year. Subtracting 15 per cent of the original value repeatedly gives the wrong answer, because each year's loss is calculated on a smaller amount.
How do I calculate percentage profit?
Subtract the cost price from the selling price to find the profit, divide that by the cost price, then multiply by 100. The cost price always goes on the bottom, since profit is measured against what was originally paid.
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Written to the published Cambridge IGCSE Mathematics (0580) syllabus. Check your school entry code and syllabus year, because Core and Extended candidates are assessed on different content. Last reviewed 2026-08-12.