Question - Compound Interest Calculation Over Time

To calculate the total amount in the account using monthly compounding interest:

1. Determine the monthly interest rate:

r = \frac{5\%}{12} = \frac{0.05}{12} \approx 0.0041667

2. Calculate the number of months for 2 years and 5 months:

n = 2 \times 12 + 5 = 29

3. Use the formula for compound interest:

A = P(1 + r)^n

A = 4300(1 + 0.0041667)^{29}

4. Simplify:

A \approx 4300(1.127493) \approx 4858.99

5. Round to the nearest penny:

A = £4858.99