If £2000 is placed into a bank account that pays 3% compound interest per year, how much will be in the account after 2 years?

For compound interest, you need to add 3% interest onto the interest already put into the account - In this case, £2000.

So, you find what £2000 + 3% interest is equalling £2060 (£60 interest per year)

Now that you've found the £60 interest, you add 3% onto that, too. Equalling £61.8 (£1.80 interest per year)

So, add the £120 for the two years normal interest to the initial amount - Equalling £2120.

Add the two years interest on the interest (£1.80 x 2 = £3.60)

The final amount = £2123.60

A=p (1+r) ^t

A=2,000 * (1+0.03) ^ (2)

A=2,121.8