Question

Brian invests ?1900 into a savings account. The bank gives 3.5% compound interest for the first 2 years and 4.9% thereafter. How much will Brian have after 6 years to the nearest pound?

Answer 1

let's check how much is it after 2 years firstly.

$\bf ~~~~~~ \textit{Compound Interest Earned Amount} \\\\ A=P\left(1+\frac{r}{n}\right)^{nt} \quad \begin{cases} A=\textit{accumulated amount}\\ P=\textit{original amount deposited}\dotfill &1900\\ r=rate\to 3.5\%\to \frac{3.5}{100}\dotfill &0.035\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{yearly, thus once} \end{array}\dotfill &1\\ t=years\dotfill &2 \end{cases} \\\\\\ A=1900\left(1+\frac{0.035}{1}\right)^{1\cdot 2}\implies A=1900(1.035)^2\implies A=2035.3275$

Brian invested the money for 6 years, so now let's check how much is that for the remaining 4 years.

$\bf ~~~~~~ \textit{Compound Interest Earned Amount} \\\\ A=P\left(1+\frac{r}{n}\right)^{nt} \quad \begin{cases} A=\textit{accumulated amount}\\ P=\textit{original amount deposited}\dotfill &2035.3275\\ r=rate\to 4.9\%\to \frac{4.9}{100}\dotfill &0.049\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{yearly, thus once} \end{array}\dotfill &1\\ t=years\dotfill &4 \end{cases}$

$\bf A=2035.3275\left(1+\frac{0.049}{1}\right)^{1\cdot 4}\implies A=2035.3275(1.049)^4 \\\\\\ A\approx 2464.54\implies \boxed{\stackrel{\textit{rounded up }}{A=2465}}$