Question

Mary invest £12000 in a savings account.

the account pays 1.5% compound interest per year.

work out the value of her investment after 2 Years

Answer 1

The value of her investment after 2 Years is £ 12362.70

Explanation:

Given : Mary invest £ 12000 in a savings account. The account pays 1.5% compound interest per year.

We have to find the value of her investment after 2 Years

Using formula for compound interest

`A=P(1+r)^n`

where, A is amount

P is principal

r is rate of interest

n is time period

We have, P = £ 12000

t = 2 years

r = 1.5% = 0.015

Substitute, we have,

`A=12000\left(1+0.015\right)^2`

Simplify, we have,

A = £ 12362.70

The value of her investment after 2 Years is £ 12362.70

Answer 2

For this case we have an equation of the form:

`y = A * (b) ^ t`
Where,
A: initial investment
b: growth rate
t: time in years.
Substituting values we have:

`y = 12000 * (1,015) ^ t`
Then, for 2 years we have:

`y = 12000 * (1,015) ^ 2 y = 12362.7`
Answer:
The value of the investment of it after two years is given by:
y = 12362.7