Question

The Bank of Fife is offering 3.5% each year on all their savings accounts, calculate how much will Ben have if he deposits £24000 for 4 years?​

Answer 1

£27,540.55

Explanation:

In order to calculate how much Ben will have if he deposits £24,000 in a savings account with an annual interest rate of 3.5% for 4 years, we can use the formula for compound interest:

`\sf A = P\left(1 + (r)/(n)\right)^(nt)`

Where:

• A = the future value of the investment/loan, including interest
• P = the principal amount (initial deposit or loan amount)
• r = the annual interest rate (as a decimal)
• n = the number of times that interest is compounded per year
• t = the number of years the money is invested or borrowed for

In this case,

P = £24,000, r = 3.5% (or 0.035 as a decimal), n is typically 1 for annual compounding, and t = 4 years.

Substitute these values into the formula:

`\sf A = 24,000\left(1 + (0.035)/(1)\right)^(1*4)`

`\sf A = 24,000(1 + 0.035)^4`

`\sf A = 24,000(1.035)^4`

`\sf A = 24,000( 1.147523001)`

`\sf A = 27540.55202`

`\sf A \approx 27540.55 \textsf{ in 2 d.p}`

So, if Ben deposits £ 24,000 in a savings account with a 3.5% annual interest rate for 4 years, he will have approximately £27,540.55 in the account at the end of the 4-year period.