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23 February, 09:29

Sally invests £8000 in a savings account. The account pays 2.8% compound interest per year work out the value of her investment after 4 years give your answer to the nearest penny

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  1. 23 February, 09:43
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    Answer: the value of her investment after 4 years is £8934.3

    Step-by-step explanation:

    The formula for determining compound interest is expressed as

    A = P (1+r/n) ^nt

    Where

    A = total amount in the account at the end of t years

    r represents the interest rate.

    n represents the periodic interval at which it was compounded.

    P represents the principal or initial amount invested.

    t represents the duration of the investment in years.

    From the information given,

    P = 8000

    r = 2.8% = 2.8/100 = 0.028

    n = 1 because it was compounded once in a year.

    t = 4 years

    Therefore,

    A = 8000 (1+0.028/1) ^1 * 4

    A = 8000 (1+0.028) ^4

    A = 8000 (1.028) ^4

    A = £8934.3 to the the nearest penny
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