Given:
Deposit (P) = £2000
Rate of interest (r) = 3%
Time (t)= 2 years
Number of time interest calculated per year (n) = 1
To find:
Amount in the account after 2 years
Solution:
Compound interest formula:
[tex]$A=P\left(1+\frac{r}{n}\right)^{n t}[/tex]
Substitute the given values.
[tex]$A=2000\left(1+\frac{3\%}{1}\right)^{1\times 2}[/tex]
To convert percentage into fraction divide by 100.
[tex]$A=2000\left(1+\frac{\frac{3}{100} }{1}\right)^{1\times 2}[/tex]
[tex]$A=2000\left(1+\frac{0.03 }{1}\right)^{ 2}[/tex]
[tex]$A=2000\left(1+0.03\right)^{ 2}[/tex]
[tex]$A=2000\left(1.03 }\right)^{ 2}[/tex]
[tex]$A=2121.8[/tex]
Therefore, £2121.8 will be in the account after 2 years.
