Question

Dan invests £1200 into his bank account.

He receives 5% per year compound interest.
How much will Dan have after 5 years?
Give your answer to the nearest penny where appropriate.

Answer 1

£1500

Explanation:

If Dan starts out with £1200 and he gets 5% per year compound interest you would multiply 1200×0.05 and get 60, this is the amount of money that was collected with interest every year. Now you need to multiply 60×5 and get 300. With the total interest over 5 years we need to add the interest and the original amount which would be 1200+300=1500.