Question

harry invests £6000 in a savings account. the account pays 3.4% compound interest per year. work out the value of his investment per year. work out the value of his investment after 3 years. give your answer to the nearst penny.

Answer 1

Because the account PAYS compound interest per year it's called depreciation.
So you do 100-3.4 = 96.6, the divide by 100 = 0.966
Then you do 0.966^3 x £6000 = £5408.6

Answer 2

The value of the given investment after 3 years will be £6633.04

Explanation:

Principal value = £6000

Rate of interest = 3.4%

n = 1 ( Number of times the interest is compounded annually)

Time = 3 years

Now, the interest is compounded annually. So,

`\text{Amount = }Principal* (1+(Rate)/(n* 100))^(n* Time)\\\\\implies Amount = 6000*(1+(3.4)/(100* 1))^(1* 3)\\\\\implies Amount = 6000* (1.034)^(3)\\\\\implies Amount=\£6633.04`

Therefore, The value of the given investment after 3 years will be £6633.04