Question

Oscar opens a savings account which gives compound interest of

3.5% per year. He puts £2000 into it.
a) How much money will Oscar have in the account after 9 years
?
b) How much interest will Oscar have earned from this account
after 9 years?
Give
your answers in pounds (£) to the nearest 1p.

Answer 1

After 9 years, Oscar will have £2320.50 in his savings account with a 3.5% compound interest rate. He will have earned £320.50 in interest.

Step-by-step explanation:

To calculate the amount of money Oscar will have in his savings account after 9 years, we can use the formula for compound interest: A = P(1+r/n)^(nt), where A is the future amount, P is the principal amount, r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the number of years.

In this case, Oscar's initial deposit is £2000, the interest rate is 3.5% per year (0.035), and the interest is compounded annually.

a) A = 2000(1+0.035/1)^(1*9) = £2320.50

So, after 9 years, Oscar will have £2320.50 in his account.

b) To calculate the interest earnings, we subtract the principal amount from the future amount.

Interest = A - P = £2320.50 - £2000

= £320.50

Therefore, Oscar will have earned £320.50 in interest after 9 years.