Question

If £2000 is placed into a bank account that pays 3% compound interest per year

how much will be in the account after 2 years?

Answer 1

Original value = £2000 = 100%
Interest is 3%, so new percentage value is 100% + 3% = 103%
Change to decimal 103/100 = 1.03 (this is your multiplier)
For 2 years 1.03^2 So £2000 x 1.03^2 = £2121,8
Final answer= £2121,7

Answer 2

£ 2121.8

Explanation:

The formula to find the compound interest is :

`A=P(1+(R)/(100) )^n`

Here,

A = Amount ⇒ ?

P ⇒ Principal ⇒ £2000

R ⇒ Interest rate ⇒ 3%

n ⇒ Time ⇒ 2 years

Let us find now.

`A=P(1+(R)/(100) )^n`

`A=2000(1+(3)/(100) )^2`

`A=2000(1+0.03 )^2`

`A=2000(1.03 )^2`

`A=2000*1.0609`

`A=2121.8`

Therefore, there will be £ 2121.8 in the bank account after 2 years.