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katy invests £2000 in a savings account for 3 years

The account pays compound interest at an annual rate of

2.5% for the first year

x% for the second year

x% for the third year

There is a total amount of £2124.46 in the savings account at the end of 3 years.

work out the rate of interest in the second year

Guest Jun 15, 2017
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2,000 x 1.025 =2,050 Principal + interest @ 2.50% for the first year.

2,124.46 / 2,050 =1.03632195...... Compound rate of return for years 2 and 3

1.03632195^1/2 =~1.018 - 1 x 100 =1.8% Interest rate for 2nd and 3rd year.

Check: 2,000 x 1.025 x 1.018 x 1.018 =2,124.46.

Guest Jun 15, 2017

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