Question

Annie invests £9500 for 5 years in a savings account. She gets 1.8% per annum compound interest. How much money does Annie have at the end of 5 years.

Answer 1

£10386.34

Explanation:

The amount in an account for a principal P saved at compound interest for a period of n years at an annual rate of r% is calculated using the formula:

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

In this case:

Principal, P=£9500

r=1.8%=0.018

n=5 years

Therefore:

`A(5)=9500(1+0.018)^5\\=9500(1.018)^5\\=\£10386.34`

At the end of 5 years, Annie will have £10386.34