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27 June, 18:03

Stephan places £950 in his bank account which pays 1.6% simple interest per year.

A) How much interest will he earn each year?

B) How much will he have in his account after 1 year?

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  1. 27 June, 18:30
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    A. He will earn £15.2 each year

    B. After one year he will have £965.2 in his account

    Step-by-step explanation:

    Applying the simple interest formula

    A = P (1 + rt)

    A = final amount

    P = initial principal balance

    r = annual interest rate

    t = time (in years

    Given data

    Principal p = £950

    Rate r = 1.6% = 1.6/100 = 0.016

    Time t = 1 year

    Substituting in our simple interest formula we have

    A = 950 (1+0.016*1)

    A = 950 (1+0.016)

    A = 950 (1.016)

    A = £965.2

    Interest = final amount - principal

    = 965.2-950

    = £15.2
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