If £2000 is placed into a bank account that pays 3% compound interest per year, how much will be in the account after 2 years ?
Compound interest works by adding interest on top of what you already have. In this case, you would start by looking at your current balance which is 2000 and calculate 3% of that amount and then add to the current balance. You then continue to add 3% onto the new total. Let’s take a look: Year 1: 2000 + (3% of 2000) = 2000 + (60) = 2060 Year 2: 2060 is the new total, so now we calculate 3% of 2060 and add this to our current total. So 2060 + (3% of 2060) = 2060 + (61.80) = 2121.80 So after two years the total amount in the bank account will be £2121.80. Hope that helps 😀
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