Question

mary invests £12000 in a savings account.

the account pays 1.5% compound interest per year

work out the value of her investment after two years

Answer 1

Answer:

The value of Mary's investment after two years = £12362.7

Step-by-step explanation:

P = Principal / initial amount

R = rate of interest per cent per year

T = number of years

A = final amount at the end of T years

Then:

A = P*(1 + R/100)^2

In our example:

P = £12000

R = 1.5 per cent per year

T = 2 years

Thus:

A = 12000*(1 + 1.5/100)^2

   = 12000*(1 + 0.015)^2

   = 12000*(1.015)^2

    = 12000*(1.030225)

    = 12362.7

Value of investment after two years = £12362.7

Answer 2

Answer:

12362.70

Step-by-step explanation:

100% + 1.5% = 101.5%

101.5/100=1.015 (which is the multiplier)

12000 x 1.015² = 12362.70