Question

A bank promises to pay 5.5% pa compound interest on deposits of £2337 if saved for 3 years. how much will the savings be worth at the end of the period mentioned? write your answer correct to 2 decimal places.

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Answer 1

£2,744.20

Step-by-step explanation:

savings amounts after 3 years can be calculated using the formula below.

A = P x ( 1 + r) ^ n

Where A is the amount after three years

P = principal amounts: £2337

r: interest rate: 5.5% or 0.055

n is the number of periods: 3 years

A =£2337 x( 1 + 0.055)^3

A =£2337 x(1.055) ^3

A=£2337 x 1.174241

£2,744.20

Amount after 3 years will be £2744.20