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Charlie invests £9000 at a rate of 0.7% per year compound interest - OCR - GCSE Maths - Question 24 - 2021 - Paper 1
Question 24
Charlie invests £9000 at a rate of 0.7% per year compound interest. Calculate the total amount of interest Charlie will have earned after 5 years. Give your answer ... show full transcript
Worked Solution & Example Answer:Charlie invests £9000 at a rate of 0.7% per year compound interest - OCR - GCSE Maths - Question 24 - 2021 - Paper 1
Step 1
Calculate the total amount after 5 years using the compound interest formula
Answer
The formula for compound interest is given by: where:
- A is the amount of money accumulated after n years, including interest.
- P is the principal amount (the initial amount of money).
- r is the annual interest rate (decimal).
- n is the number of years the money is invested or borrowed for.
In this case, we have:
- P = £9000
- r = 0.7/100 = 0.007
- n = 5
Substituting these values into the formula gives: Calculating this: Using a calculator to find :
Step 2