Cathrine has £7000 to invest.

She decides to invest it for 5 years at a rate of 4% per annum.

How much will she have after 5 years if she invests it at compound interest?

Since this is a compound interest problem, you have to take note that the amount Catherine will get per year is not the same. It will increase per year since it is compounded. So first, we get the amount after one year. This will be 7000 x 0.04 which is 280 plus 7280. In the second year, she will get 7571 (7280 x 0.04 + 7280). In the third year, she will get 7874 (7571 x 0.04 + 7571). In the fourth year, she will get 8189 (7874 x 0.04 + 7874). And finally in the fifth year, she will get 8517 (8189 x 0.04 + 8189). So after five years, she has 8517