Question

Dan invests £1300 into his bank account.
He receives 5% per year simple interest.
How much will Dan have after 2 years?
Give your answer to the nearest penny where appropriate

Answer 1

Given parameters:

Principal  = £1300

Interest rate  = 5%

Duration  = 2yrs

Unknown:

Total amount of Dan's principal = ?

To solve this problem, we apply the equation below:

  Total investment worth  = Principal + interest

   Interest  = $\frac{PRT}{100}$

where P is the principal

          R is the rate

          T is the time

Now, input the parameters;

     Total investment worth  = £1300 + £ $\frac{1300 x 5 x 2}{100}$

                                             = £1300 + £130

                                             = £1430

The amount after two years is £1430