1. Natasha invests £250 in a building society account. At the end of the year her account is credited with 2% interest. How much interest had her £250 earned in the year?

2. Alan invests £140 in an account that pays r% interest. After the first year he receives £4.20 interest. What is the value of r, the rate of interest?

3. What is the actual rate of interest if £4000 deposited for 3 years attracts interest of £1440?

4. I deposit £250 in a high-earning account paying 9% compound interest and leave it for three years. What will be the balance on the account at the end of that time?

5. You borrow £500 for four years and agree to pay 6 1 2 % compound interest for this period. What amount will you have to pay back?

Good work!!!

2. Alan invests £140 in an account that pays r% interest. After the first year he receives £4.20 interest. What is the value of r, the rate of interest?

r/100 x £140 = £4.20

r = 100 x 4.20 / 140

= 420/140

= 3%

So the interest rate is 3%

pstnonsonjoku pstnonsonjoku · Answer 2 · 2021-08-14T22:16:28+02:00

Interest is money that is added to the principal sum after a given period of time. Interest could be compound or simple.

Simple interest is calculated solely on the principal while compound interest is calculated both on the principal and the interest.

1) Natasha's interest is calculated from the formula; [tex]I = \frac{PRT}{100}[/tex]

Where;

I = interest

P = principal

R= rate

T = time

Hence;

[tex]I = \frac{250 * 2 * 1}{100} \\[/tex]

I = 5 £

2)

[tex]I = \frac{PRT}{100} \\\\R = \frac{100I}{PT} \\\\R = \frac{100 * 4.20}{140 * 1}[/tex]

R = 3%

3)

[tex]I = \frac{PRT}{100} \\\\R = \frac{100I}{PT} \\\\R = \frac{100 * 1440}{4000 * 3}[/tex]

R = 12%

4)

For compound interest;

A = amount

r = rate

n = time

[tex]A = P( 1 + r)^n\\\\A = 250(1 + 0.09)^3\\[/tex]

A = 324 £

5)

[tex]A = P(1 + r)^n\\\\A = 500(1 + 0.0625)^4\\[/tex]

A = 643 £

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