Question

dan invests £1200 into his bank account. he receives 5% per year compound interest. how much will dan have after 5 years

Answer 1

Dan has approximately £ 1532 in his account

Solution:

The formula for compound interest is given as:

$A = P(1 + r)^t$

Where,

P is the principal sum

r is rate of interest in decimal

t is number of years

From given,

p = 1200

r = 5 % = 0.05

t = 5 years

Substituting we get,

$A = 1200(1 + 0.05)^5\\\\A = 1200(1.05)^5\\\\A = 1200 \times 1.27628\\\\A = 1531.5378 \approx 1532$

Thus Dan has approximately £ 1532 in his account

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