Amount after 2 years is £ 2121.8
Solution:
Given that £2000 is placed into a bank account that pays 3% interest per year
To find: amount after 2 years
Formula for Amount compounded annually is as follows:
\mathrm{A}=P\left(1+\frac{r}{100}\right)^{n}
Where "p" is the principal sum
"r" is the rate of interest
"n" is the number of years
Here in this sum,
p = 2000
r = 3 %
n = 2
Substituting the values in above formula,
[tex]\begin{aligned}&A=2000\left(1+\frac{3}{100}\right)^{2}\\\\&A=2000(1+0.03)^{2}\\\\&A=2000(1.03)^{2}\\\\&A=2000 \times 1.0609=2121.8\end{aligned}[/tex]
Thus amount after 2 years is £ 2121.8
