Question

Work out the balance for £1500 invested for 2 years at 3.7% per annum

Answer 1

Given:
Principal = 1,500
term = 2 years
interest rate = 3.7% per annum

Simple Interest = Principal * interest rate * term
S.I = 1,500 * 0.037 * 2
S.I = 111

Total value = 1,500 + 111 = 1,611

Compound interest
A = P (1+r/n)^nt
where n is the number of times interest is compounded. Assuming interest is only compounded once.

A = 1,500(1+0.037/1)^1*2
A = 1,500(1.037)²
A = 1,500(1.075369)
A = 1,613.0535