Question

Northern Bank has two types of account. Both accounts pay compound interest. Cash savings account Interest 2.5% per annum Shares account Interest 3.5% per annum Ali invests £2000 in the cash savings account. Ben invests £1600 in the shares account. (a) Work out who will get the most interest by the end of 3 years. You must show all your working. (4 marks)

Answer 1

Step-by-step explanation:

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Back to Edexcel Maths Higher November 2018 Paper 2 Home

Q4: Answers – Paper 2 – November 2018

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Content:

Compound Interest – Part 1

Compound Interest – Part 2

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Compound Interest

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Working

Question

4) Northern Bank has two types of account.

Both accounts pay compound interest.

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Ali invests £2000 in the cash savings account.

Ben invests £1600 in the shares account.

(a) Work out who will get the most interest by the end of 3 years.

You must show all your working.

[4 marks]

In the 3rd year the rate of interest for the shares account is changed to 4% per annum.

(b) Does this affect who will get the most interest by the end of 3 years?

Give a reason for your answer.

Answer 2

Answer:

ALI will receive more compound interest ........( From 1& 2)

compared to BEN

Step-by-step explanation:

Ali invests £2000 in cash savings account

Ben invests £1600 in share account

for Cash saving:. R=2.5 N=3 P=£2000

compound interest= P(1+R/100)^N. (Formula)

compound interest= 2000(1+2.5/100)^3

compound interest= £2153.78 ...(1)

for share account:. R=3.5 N= 3 P=£1600

compound interest= P(1+R/100)^N

compound interest= 1600(1+3.5/100)^3

compound interest= £1773.94 ..(2)

ALI will receive more compound interest ........( From 1& 2)

compared to BEN