Question

4 of 9
Colin invests £300 into his bank account.
He receives 5% per year compound interest.
How much will Colin have after 6 years?
Give your answer to the nearest penny where appropriate.
£​

Answer 1

Answer:

A = £402.03

Explanation:

Given the following data;

Principal = £300

Interest rate = 5% = 5/100 = 0.05

Time = 6 years

Number of times, n = 1

To find the future value, we would use the compound interest formula;

$A = P(1 + \frac{r}{n})^{nt}$

Where;

A is the future value.

P is the principal or starting amount.

r is annual interest rate.

n is the number of times the interest is compounded in a year.

t is the number of years for the compound interest.

Substituting into the equation, we have;

$A = 300(1 + \frac{0.05}{1})^{1*6}$

$A = 300(1 + 0.05)^{6}$

$A = 300(1.05)^{6}$

$A = 300*1.3401$

A = £402.03