Question

Dan invests £1500 into his bank account.

He receives 3% per year simple interest.
How much will Dan have after 2 years?
Give your answer to the nearest penny where appropriate.

Answer 1

£1,725.00

Explanation:

To calculate simple interest, we use the formula:

a = p(1 + rt)

a is the answer

p is the principle, or the starting amount of money

r is the rate, or the rate of interest (the percent)

and t is the time, or years.

First, 3% as a decimal is 0.03

So we can plug that in as r.

Then just plug the rest of the numbers in.

a = 1500(1 + 0.03 x 2)

Then just solve the equation to get 1,725.00.

Hope this helps!