Question

1 Jesy invests £8000 for n years in a savings account.

To find the value, V, of her investment after n years she uses the formula:


V = 8000 × (1.025)n

(a) Write down the annual rate of interest Jesy earns.

(b) Find the total amount of interest Jesy earns in three years.

(Total for question 1 is 3 marks)

Answer 1

2.5% , $8608

Explanation:

Given data

From the given the expression V = 8000×(1.025)^n

The rate is given as

2.5%

For n= 3

The total amount is

V = 8000 × (1.025)^3

V= 8000*1.076

V= $8608

Hence the final amount is $8608