Question

Sally invests £8000 in a savings account.

The account pays 2.8% compound interest per year.
Work out the value of her investment after 4 years.
Give your answer to the nearest penny.

Answer 1

£8896

Explanation:

First, converting R percent to r a decimal

r = R/100 = 2.8%/100 = 0.028 per year,

then, solving our equation

I = 8000 × 0.028 × 4 = 896

I = £ 896.00

The simple interest accumulated

on a principal of £ 8,000.00

at a rate of 2.8% per year

for 4 years is £ 896.00.