Question

Ikram invests £7000 in a savings account paying compound interest for 2 years.

In the first year, the rate of interest is x%.
At the end of the first year the value of Ikram's investment is £7273
In the second year, the rate of interest is x/3%
What is the value of Ikram's investment at the end of the 2 years?

Answer 1

The answer is £7367.55

Explanation:

Find the interest.

£7273 - £7000 = £273

Then, find the multiplier for the 1st year.

273/7000 = 0.039

Then, find the multiplier for the next year.

It says it is x/3, with x being the 1st year multiplier, so do 0.039/3 = 0.013

Afterwards, multiply the total money from the 1st year with the 2nd years multiplier.

£7273 x 1.013 = £7367.55

Hope this helps :)