➗ Mathematics

Reverse Percentages and Compound Interest: Step by Step

Work backwards from a final price to the original amount, and calculate compound interest, with worked examples and practice questions.

  • ⏱ 3 min read
  • ✏️ 3 worked examples
  • 🎯 5 practice questions
  • 📶 Intermediate
GCSEHigh School

Curriculum fit: GCSE Maths Ratio, proportion and rates of change (Foundation and Higher). US: Grade 7 and Algebra I percent problems, exponential models.

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What Is It?

Sometimes you know the price after a percentage change and need to find the original. This is a reverse percentage problem. The key is to write the final amount as a percentage of the original, then divide.

Compound interest means each year's interest is added to the balance, so the next year's interest is calculated on a larger amount.

Sale price £60 after 20% off£15£15£15£15£1580% = £6020% off80% = £60 → 1% = £60 ÷ 80 = £0.75100% = £0.75 × 100 = £75 (original)
A reverse percentage finds the original amount. If the sale price is 80% of the original, find 1% first, then multiply by 100.

Key Formulas and Ideas

  • Original = final amount ÷ multiplier.
  • Multiplier for an increase of r%: 1 + r/100. For a decrease: 1 − r/100.
  • Compound interest: A = P × (1 + r/100)ⁿ, where P is the principal, r the yearly rate and n the number of years.

Worked Examples

Example 1

Reverse After a Decrease

Question

After a 30% sale discount a jacket costs £42. What was the original price?

  1. The multiplier for a 30% decrease is 0.7.
  2. Original = 42 ÷ 0.7 = 60.

✓ Answer £60

Example 2

Reverse After an Increase

Question

After a 25% increase a price is £75. Find the original.

  1. Multiplier = 1.25.
  2. Original = 75 ÷ 1.25 = 60.

✓ Answer £60

Example 3

Compound Interest

Question

£2000 earns 3% compound interest a year. Find the amount after 4 years.

  1. Multiplier = 1.03.
  2. Amount = 2000 × 1.03⁴ = 2000 × 1.12550881.
  3. = 2251.02 (nearest penny).

✓ Answer £2251.02

Common Mistakes to Avoid

  • Working out 30% of the sale price and adding it back, which gives the wrong original.
  • Using the wrong multiplier, such as 0.3 instead of 0.7.
  • Using simple interest by multiplying the interest by the number of years.
  • Rounding the multiplier before finishing.

Practice Questions

0 of 5 answered
Q1A price after a 20% discount is £36. What was the original price?
Q2After a 30% increase a value is 117. What was the original?
Q3£800 at 5% compound interest for 2 years gives…
Q4What is the multiplier for a 6% decrease?
Q5Compound interest is higher than simple interest because…

Frequently Asked Questions

Why can't I add 30% to the sale price?

The 30% was taken from the original price, not from the sale price, so 30% of the sale price is a different amount.

How is compound interest different from simple interest?

Simple interest is always based on the original amount. Compound interest includes interest already earned.

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Sources and Review

Reviewed by StudyMorrow editorial review on 5 Nov 2026.