Calculate the interest on borrowing £40 for 3 years if the compound interest rate is 5% per year.

The method for finding compound interest is: Original Amount x Multiplier^Time
So, from the question we know that: Original Amount= 40, Time= 3 years, so we say 3
Next we need to work out the multiplier:
The compound interest rate is 5% per year, so we do 100% + 5% = 105%
To find the multiplier we divide this by 100, so 105 / 100 = 1.05The multiplier is 1.05
Hence, following the method, we know that
40 x 1.05³ = 46.305
As this is a problem involving money, all rounding should be done to 2 d.p. to represent the pence
So the answer is: £46.31