Colin invests £4300 into his bank account. He receives 4% per year compound interest. How much will Colin have after 3 years? Give your answer to the nearest penny where appropriate.
Answers
Answer: £4,837
Step-by-step explanation:
Colin invests £4300 and receives a compound interest of 4% per year.
All we need is the amount of money Colin will have at the end of the three years.
Compound interest is calculated as follows;
1st year: invested amount × the rate. This gives you the interest earned.
4300 × (4/100) = 172
2nd year: add the interest earned in the first year to the invested amount. Multiply the sum you get by the rate, to get the interest of the second year.
4300 + 172 = 4472
4472 × (4/100) = 178.88
3rd year: add to the invested amount, the interest earned in the first and the second year and multiply the sum by the rate of interest.
172 + 178.88 + 4300 = 4650.88
4650.88 × (4/100) = 186.03
After getting the rates of the three years, add them to the invested amount to get what Colin will have after the three years.
4300 + 172 + 178.88 + 186.03 = 4836.91
The question requires that you give the answer to the nearest pound. Therefore we are going to round off from the decimal point. Since we have .9, which is more than half, we will add one to the 6 and do away with the numbers after the decimal point.
Colin will have £4837
Answer:
4836.92
Step-by-step explanation:
hope this helps :)