To determine how much Hannah will have after investing £250 for 4 years with a simple interest rate of 5% per annum, follow these steps:
1. Identify the given values:
- Principal (P): £250
- Interest rate (r): 5% per annum (which is 0.05 in decimal form)
- Time period (t): 4 years
2. Calculate the simple interest:
Simple interest (SI) is computed using the formula:
[tex]\[
SI = P \times r \times t
\][/tex]
- Substitute the given values into the formula:
[tex]\[
SI = 250 \times 0.05 \times 4
\][/tex]
- Perform the multiplication to find the simple interest:
[tex]\[
SI = £50
\][/tex]
3. Calculate the total amount after 4 years:
The total amount (A) is the sum of the principal and the simple interest.
[tex]\[
A = P + SI
\][/tex]
- Substitute the principal and the simple interest into the formula:
[tex]\[
A = 250 + 50
\][/tex]
- Add the values to find the total amount:
[tex]\[
A = £300
\][/tex]
Therefore, after 4 years, Hannah will have a total amount of £300.
