Question

If £2000 is placed into a bank account that pays 3% compound interest per year, how much will be in the account after 2 years?​

Answer 1

after 2 years, the amount in the account will be approximately £2121.80.

Explanation:

To calculate compound interest, you can use the formula:

`A = P (1 + (r)/(n))^(nt )`

where

1. A is the future value of the investment/loan, including interest
2. P is the principal amount (the initial amount of money).
3. r is the annual interest rate (decimal).
4. n is the number of times that interest is compounded per unit
5. t is the time the money is invested or borrowed for in years.

In this case:

• A = ?

• P = £2000
• r =0.03 (3% as a decimal)
• n =1 (compounded annually)
• t =2 years

Now, plug in these values into the formula:

`A = 2000 (1 + (0.03)/(1) )^((1)(2))`

`A = 2000 (1.03)^(2)`

`A= 2000(1.0609)`

`A=2121.80`

So, after 2 years, the amount in the account will be approximately £2121.80.