Question

harry invests £6000 in a savings account. the account pays 3.4% compound interest per year. work out the value of his investment per year. work out the value of his investment after 3 years. give your answer to the nearst penny.

Answer 1

Because the account PAYS compound interest per year it's called depreciation.
So you do 100-3.4 = 96.6, the divide by 100 = 0.966
Then you do 0.966^3 x £6000 = £5408.6

Answer 2

Answer:

The value of the given investment after 3 years will be £6633.04

Step-by-step explanation:

Principal value = £6000

Rate of interest = 3.4%

n = 1 ( Number of times the interest is compounded annually)

Time = 3 years

Now, the interest is compounded annually. So,

$\text{Amount = }Principal\times (1+\frac{Rate}{n\times 100})^{n\times Time}\\\\\implies Amount = 6000\times(1+\frac{3.4}{100\times 1})^{1\times 3}\\\\\implies Amount = 6000\times (1.034)^{3}\\\\\implies Amount=\£6633.04$

Therefore, The value of the given investment after 3 years will be £6633.04