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Inessa [10]
3 years ago
13

9. Barbara invests £14,000. In the first year, she earns 5.9% interest. In the second year, she earns 3.2% interest, a. What was

the total percentage increase over the 2 years?
Mathematics
1 answer:
Levart [38]3 years ago
7 0

Answer:

Step-by-step explanation:

Use future value formula to get the total amount at the end of year 1 and year 2;

<u>First, find FV at the end of 1 year.</u>

FV = P(1+r)^n

P = principal amount or amount invested in present value terms = 14,000

r= discount rate = 5.9% OR 0.059 as a decimal

n= total duration of investment = 1

FV = 14,000(1.059)^1

FV= 14,826

<u>Next, find FV of 14,826 at the end of year 2;</u>

P = principal amount or amount invested in present value terms = 14,826

r= discount rate = 3.2% OR 0.032 as a decimal

n= total duration of investment = 1

FV = P(1+r)^n

FV = 14,826 (1.032)^1

FV = <em>15,300. 432</em>

Percentage increase =[ (New value - Old value)/Old value] *100

 = [ (15,300.432 - 14,000)/14,000] *100

= (1,300.432/14,000)*100

= 9.2888

Therefore total percentage increase over the 2 years = <u>9.29%</u>

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