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Compound interest 5. A bank pays interest of 12%. Mr Olsen puts £5000 in the bank. How much does he have after(i) One year(ii) Three years?

User Asdjfiasd
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1 Answer

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17 votes

Answer:


\begin{gathered} i)\text{ \textsterling5,600} \\ ii)\text{ \textsterling7,024.64} \end{gathered}

Step-by-step explanation:

Here, we want to get the value of the deposit after the stipulated time

Mathematically:


A\text{ = P\lparen1 + }(r)/(n))\placeholder{⬚}^(nt)

where:

A is the amount after the given time

P is the deposited amount which is 5,000 pounds

r is the interest rate which is 12% = 12/100 = 0.12

n is the number of times interest is compounded yearly which is 1

t is the number of years

i) One year

We have that as:


\begin{gathered} A\text{ = 5,000\lparen1 + }(0.12)/(1))\placeholder{⬚}^(1*1) \\ \\ A\text{ = \textsterling5,600} \end{gathered}

ii) Three years


\begin{gathered} A\text{ = 5000\lparen1 + }(0.12)/(1))\placeholder{⬚}^(3*1) \\ \\ A\text{ = \textsterling7,024.64} \end{gathered}

User Keithepley
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