Answer:
£107.72
Step-by-step explanation:
Given
[tex]P = 200[/tex] -- Principal
[tex]r = 9\%[/tex] -- Rate
[tex]t = 5\ years[/tex] -- Time
[tex]n = 1[/tex] -- compounded once in a year
Required
Determine the compound interest
This is calculated using:
[tex]I = P(1 + \frac{r}{n})^{nt} - P[/tex]
[tex]I = 200(1 + \frac{9\%}{1})^{1*5} - 200[/tex]
[tex]I = 200(1 + \frac{0.09}{1})^5 - 200[/tex]
[tex]I = 200(1 + 0.09)^5 - 200[/tex]
[tex]I = 200(1.09)^5 - 200[/tex]
[tex]I = 307.72 - 200[/tex]
[tex]I = 107.72[/tex]
Hence, the total interest earned is £107.72
