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    HEY :P

    Ginny opens a savings account and decides to pay £200 into the account at the start of
    each month. At the end of each month, interest of 0.5% is paid into the account.
    a Find, to the nearest penny, the interest paid into the account at the end of the
    third month. (4)

    amount in account after the 3rd payment in
    =200+(1.005x200)+(1.005^2 x200)
    =603.005
    interest paid at end of 3rd month
    =0.005x603.005=£3.02 (nearest penny)

    i dont get why they did 603.005 x 0.005 ? could someone explain this to me .

    thank you , would appreciate it
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    (Original post by Sadilla)
    HEY :P

    Ginny opens a savings account and decides to pay £200 into the account at the start of
    each month. At the end of each month, interest of 0.5% is paid into the account.
    a Find, to the nearest penny, the interest paid into the account at the end of the
    third month. (4)

    amount in account after the 3rd payment in
    =200+(1.005x200)+(1.005^2 x200)
    =603.005
    interest paid at end of 3rd month
    =0.005x603.005=£3.02 (nearest penny)

    i dont get why they did 603.005 x 0.005 ? could someone explain this to me .

    thank you , would appreciate it
    At the end of the 1st month you put in 0.005\cdot 200 so that in total you have 200+0.005\cdot 200 = 200 \cdot 1.005.

    Similarly, the end of the 2nd month you put in 0.005 \cdot (200 \cdot 1.005) so that you end up with 200 \cdot 1.005 +  0.005 \cdot (200 \cdot 1.005) = 200 \cdot 1.005^2

    So it should be clear why they did what they did for the end of the 3rd month.
 
 
 
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