£2000 is invested in a savings account. Compound interest at 2.1% P.A.

How much interest will be paid after two years?

A£4 B) £5.20 C) £2.44 D) £84.88

Verified Answer :

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\(\sf\ 2.1\ percent\ interest\ P.A.\ means\ annually.\ Annually\ means\ every\ year.\\\\ The\ question\ requires\ a\ compound\ interest\ formula.\\\\\ The\ formula\ is\\{\boxed{A=P(1+ \frac{r}{n})^n^t}\)



\(\sf\ P\ =\ principal\ amount\ (2000)\\\\ r\ =\ annual\ rate\ of\ interest\ (.021)\\\\ t\ =\ number\ of\ years\ the\ amount\ is\ deposited\ or\ borrowed\ for\ (2)\\\\ A\ =\ amount\ of\ money\ accumulated\ after\ n\ years,\ including\ interest\ (?)\\\\ n\ =\ number\ of\ times\ the\ interest\ is\ compounded\ per\ year\ (1)\\\\\\\\A=P(1+ \frac{r}{n})^n^t\\\\A=2000(1+ \frac{.021}{1})^2\\\\A=2000(1.021)^2\\\\A=2000(1.042441)\\\\\A=2084.882\\\\\\\ To\ find\ the\ amount\ of\ interest:\\2084.882-2000=84.882=\\\\{\boxed{84.88}\)



\(\boxed{\sf\ Answer:\ D}\)