Question

Colin invests £3900 into his bank account.
He receives 4% per year compound interest.
How much will Colin have after 2 years?
Give your answer to the nearest penny where appropriate.

Answer 1

Answer:

Colin will have 421824 pennies after 2 years

Step-by-step explanation:

Given:

Amount invested in bank by Colin (P) = £3900

Rate of interest (r) = 4%

Time period (n) = 2 years

To find: Amount after 2 years (A)

Solution:

Formula for amount (A) is $A=P\left ( 1+\frac{r}{100} \right )^n$

$A=3900\left ( 1+\frac{4}{100} \right )^2\\=3900\left ( 1+\frac{1}{25} \right )^2\\=3900\times \frac{26}{25}\times \frac{26}{25}\\=4218.24$

As 1 pound = 100 pennies,

4218.24 pounds = 4218.24 × 100 = 421824 pennies

So,

Colin will have 421824 pennies after 2 years.