Question

Mary incests £12000 in a savings account. The account pays 1.5% compound interest per year

Answer 1

`A=\£12.362.70`

Explanation:

The complete question is

Mary invests £12000 in a saving account. The account pays 1.5% compound interest per year. Work out the value of her investment after 2 years.

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=2\ years\\ P=\£12,000\\ r=1.5\%=1.5/100=0.015\\n=1`

substitute in the formula above

`A=12,000(1+(0.015)/(1))^(1*2)`

`A=12,000(1.015)^(2)`

`A=\£12.362.70`