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bella invests £5000 in an account for two years.The acccount pays 3% compound interest per annum. Bella has to pay 20% tax on the interest earned each year. This tax is taken from the account at he end of each year. How much money will Bella have in her account at he end of the two years?

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Yna9141
The amount of money in the account after a year can be calculated through the equation,

      F = P x (1 + i)^n

1st year:
 
      F = (£5000)(1 + 0.03)^1 = £5150

The interest earned is £150. 20% of this is £30 leaving £5120. 

2nd year:

     F = (£5120)(1.03)^1 = $5273.6

The interest earned in this year is £153.6. 20% of this is £30.72. The amount that is left in the account is $5242.88

ANSWER: $5242.88