Question

Angel invests £1430 in a bank account. The account gathers compound interest at a rate of 0.5% per month. How much money will be in the account after 9 months? Give your answer in pounds to the nearest 1p.​

Answer 1

We can use the formula for compound interest:

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

where:

A = the final amount

P = the principal amount (initial investment)

r = the annual interest rate (as a decimal)

n = the number of times the interest is compounded per year

t = the time period in years

In this case, we have:

P = £1430

r = 0.005 (0.5% per month)

n = 12 (compounded monthly)

t = 9/12 = 0.75 (9 months is three-quarters of a year)

So we can plug in these values to find the final amount:

A = £1430(1 + 0.005/12)^(12*0.75)

A ≈ £1481.18

Therefore, the amount of money in the account after 9 months will be approximately £1481.18.