💯 Maths

# 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 ?

1 answers

Answered May 18Maths

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Imdad AhadBackend Developer | Worked for GOV UK Notify, BT, Shell, GE | BSc Comp Sci

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 😀