theo invests £800 in an account that pays 2% simple interest each year
how much interest is earned in a year
how much there will be in the account after 5 years
how much will there be in 10 years
after n years, the interest will be
800(0.02n)
To find the answers to these questions, we can use the formula for calculating simple interest:
Interest = Principal * Interest Rate * Time
1. How much interest is earned in a year?
In this case, the Principal (P) is £800, the Interest Rate (R) is 2%, and the Time (T) is 1 year. We can substitute these values into the formula:
Interest = £800 * 0.02 * 1
Interest = £16
Therefore, Theo earns £16 in interest in a year.
2. How much will there be in the account after 5 years?
To find the total amount in the account after 5 years, we need to add the original Principal (£800) to the total interest earned over 5 years. Since we know that the annual interest is £16, we can calculate the total interest over 5 years:
Total Interest = £16 * 5
Total Interest = £80
Now, we can find the total amount in the account after 5 years by adding the Principal and the Total Interest:
Total Amount = Principal + Total Interest
Total Amount = £800 + £80
Total Amount = £880
Therefore, there will be £880 in the account after 5 years.
3. How much will there be in 10 years?
Using the same logic as before, we can find the Total Interest over 10 years:
Total Interest = £16 * 10
Total Interest = £160
Adding the Principal and the Total Interest, we can calculate the Total Amount after 10 years:
Total Amount = Principal + Total Interest
Total Amount = £800 + £160
Total Amount = £960
Therefore, there will be £960 in the account after 10 years.