Question

James invested £2000 for three years in an Internet Savings Account. He is paid 5.5% per annum compound interest. Work out the total interest earned after 3 years

Answer 1

Answer:

£348.48

Step-by-step explanation:

Investment: £2000

Interest rate: 5.5% compounded annually

Duration: 3 years

Sum after 3 years: £2000*1.055³=£2348.48

Total interest: £2348.48- £2000= £348.48

Answer 2

The total interest that James earned = £ 348.483

Given:

James invested £2000 for three years in an Internet Savings Account

At rate 5.5% per annum compound interest.

To find:

The total interest earned after 3 years

Solution:

Given Principal amount P = £2000  

Rate of interest R = 5.5% per annum  

Time period T = 3 years

As we know the formula for

    Compound interest C.I = P(1+R/100)^T - P

From above data

Compound interest C.I = 2000(1+5.5/100)³ - 2000

= 2000 ( 1+0.055)³ - 2000

= 2000 ( 1.055)³ - 2000

= 2348 - 2000

= 348.483

The total interest that James earned = £ 348.483

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