Question

Work out the balance for £720 invested for 4 years at 5% per annum

Answer 1

The balance of £720 invested for 4 years at 5% per annum, compounded annually, would be approximately £875.16.

Step-by-step explanation:

To calculate the balance of £720 invested for 4 years at a 5% per annum interest rate, one would typically use the compound interest formula given that interest is compounded annually: A = P(1 + r/n)nt, where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years.

In this case, the interest is likely compounded annually (n = 1), so the formula simplifies to A = P(1 + r)t. Substituting the given values: A = £720(1 + 0.05)4 = £720(1.05)4.

Calculating this gives us: A = £720 * 1.21550625 = £875.1645

Therefore, the balance after 4 years would be approximately £875.16.

Answer 2

Amount of Interest (I) = P * R * T /100
I = 720 * 5 * 4 /100
I = 144

Balance = Initial amount + Interest amount
B = 720 + 144 = 864

In short, Your Answer would be £864

Hope this helps!