Answer: £14378
Step-by-step explanation:
We would apply the formula for determining compound interest which is expressed as
A = P(1+r/n)^nt
Where
A = total amount in the account at the end of t years
r represents the interest rate.
n represents the periodic interval at which it was compounded.
P represents the principal or initial amount deposited
From the information given,
P = £11000
n = 1 because it was compounded once in a year.
For the first 3 years,
r = 3.9% = 3.9/100 = 0.039
Therefore,
A = 11000(1+0.039/1)^1 × 3
A = 11000(1.039)^3
A = $12338
The new principal is 12338
For the next 4 years,
A = 12338(1.039)^4
A = 14378
