Answer:
7.2%
Step-by-step explanation:
You want the interest rate that will grow £1200 to £1379.02 in 2 years when compounded annually.
Compound interest
The value of an account earning compound interest is given by ...
A = P(1 +r)^t
where principal P is invested at rate r for t years.
For this problem, we have ...
1379.02 = 1200(1 +r)²
Solving for r gives ...
1379.02/1200 = (1 +r)² . . . . . . divide by 1200
√(1379.02/1200) = 1 +r . . . . . . take the square root
r = √(1379.02/1200) -1 ≈ 0.072 = 7.2% . . . . . subtract 1, evaluate
The interest rate on the account is 7.2%.
