Question

Katy invests £14 000 in a savings account for 3 years.

The account pays simple interest at a rate of 1.5% per annum.
Calculate the amount in her savings account Katy will get at the end of the 3 years

Answer 1

£14,630

Explanation:

Simple interest formula: A = P(1 + rt)

where:

• A = final amount
• P = principal amount
• r = annual interest rate (as a decimal)
• t = time (in years)

Given:

• P = £14,000
• r = 1.5% = 0.015
• t = 3 years

⇒ A = 14000(1 + 0.015 · 3)

⇒ A = 14000(1.045)

⇒ A = £14,630

Answer 2

Simple interest formula:

Total = start x ( 1 + rate x time )

Total = 14,000 x ( 1 + (0.015 x3))

Total = 14,000 x 1.045

Total = 14,630