Question

£600 is invested into a savings account paying

5% compound interest per year. How much is in
the account after three years

Answer 1

£694.575

Explanation:

Using the formula for calculating the compound interest expressed as;

A = P(1+r)^t

P is the principal = £600

r is the rate = 5% = 0.05

t is the time = 3 years

Substitute into the formula;

A = 600(1+0.05)^3

A = 600(1.05)^3

A = 600(1.157625)

A = 694.575

hence the amount in the account after 3 years is £694.575