Question

1. Natasha invests £250 in a building society account. At the end of the year her account is credited with 2% interest. How much interest had her £250 earned in the year?
2. Alan invests £140 in an account that pays r% interest. After the first year he receives £4.20 interest. What is the value of r, the rate of interest?

3. What is the actual rate of interest if £4000 deposited for 3 years attracts interest of £1440?

4. I deposit £250 in a high-earning account paying 9% compound interest and leave it for three years. What will be the balance on the account at the end of that time?

5. You borrow £500 for four years and agree to pay 6 1 2 % compound interest for this period. What amount will you have to pay back?


Good work!!!

Answer 1

1. Natasha invests £250 in a building society account. At the end of the year her account is

credited with 2% interest. How much interest had her £250 earned in the year?

Solution: Interest = 2% of £250

= 2/100 x £250

 answer       = £5

2. Alan invests £140 in an account that pays r% interest. After the first year he receives £4.20 interest. What is the value of r, the rate of interest?

r/100 x £140 = £4.20

        r = 100 x 4.20 / 140

             = 420/140

           = 3%

So the interest rate is 3%