Answer:
V = £21,012.50
Step-by-step explanation:
Compound interest formula
[tex]\sf A=P(1+\frac{r}{n})^{nt}[/tex]
where:
- A = final amount
- P = principal
- r = interest rate (in decimal form)
- n = number of times interest applied per time period
- t = number of times periods elapsed
Given:
- A = V
- P = £20,000
- r = 2.5% = 0.025
- n = 1
- t = 2
Substituting given values into the formula:
[tex]\sf \implies V=20000(1+\frac{0.025}{1})^{(1 \times 2)}[/tex]
[tex]\sf \implies V=21012.5[/tex]
