If I have £730 in my bank account which has 2.5% compound interest per year, how much more money will be in there after two years?
AFTER 1 YEAR: interest = £730 x 0.025 = £18.25
Rotal money in my account = £730 + £18.25 = £748.25.
AFTER 2 YEARS: interest = £748.25 x 0.025 = £18.706
Total money in my account = £766.96 (remember to round to the nearest penny)
ALTERNATIVELY:
£730 x (1.025)2 = £766.96
HOW MUCH MONEY HAVE I MADE?
Money after two years - money I put in = £766.96 - £730 = £36.96
