Question

Brian invests £8300 into his bank account.
He receives 1.4% per year compound interest.
How much will Brian have after 7 years?
Give your answer to the nearest penny where appropriate.

Answer 1

Answer:

The nearest penny will be £9146.6

Step-by-step explanation:

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

A = final amount

P = initial principal balance

r = interest rate

n = number of times interest applied per time period

t = number of time periods elapsed

A = 8300 [ 1 + {1.4 / (7*100)}]^(7*7)

A = 8300 [ 1 + {0.002}]^(49)

A= 8300 [ 1.002 ]^(49)

A = 8300 [ 1.102 ]

A = £9146.6

What is Compound Interest (CI) ?

Compound Interest is all about adding interest to principal amount of loan , deposit .

Answer 2

The Amount in account after 7 years is $\pounds$ 9146.6

Step-by-step explanation:

Given as :

The principal invested in account = p = $\pounds$ 8300

The rate of interest = r = 1.4% compounded

The time period = t = 7 years

Let The Amount after 7 years = $\pounds$A

From Compound Interest method

Amount = Principal × $(1+\dfrac{rate}{100})^{time}$

Or,       A = p × $(1+\dfrac{r}{100})^{t}$

Or,       A = $\pounds$ 8300 × $(1+\dfrac{1.4}{100})^{7}$

Or,       A = $\pounds$ 8300 × $(1.014)^{7}$

∴          A = $\pounds$ 8300 × 1.102

i.e Amount = $\pounds$ 9146.6

So, The Amount after 7 years = A =  $\pounds$ 9146.6

Hence, The Amount in account after 7 years is $\pounds$ 9146.6 Answer