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 2 years.​

Answer 1

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Answer 2

Answer:

£12362.70

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