Final answer:
After 2 years with a compound interest rate of 1.5% per year, Mary's £12,000 investment will grow to £12,362.70.
Step-by-step explanation:
Calculating Compound Interest
Mary has invested £12,000 in a savings account with a compound interest rate of 1.5% per year. To calculate the amount of money in the account after 2 years, we need to use the compound interest formula:
A = P(1 + r/n)^(nt),
Where:
In this case, interest is compounded yearly (n = 1), so the formula simplifies to:
A = £12,000(1 + 0.015)^2
Calculating this:
A = £12,000(1.015)^2
A = £12,000(1.030225)
A = £12,362.70
After 2 years, Mary will have £12,362.70 in her savings account.