Kay invests £1500 in an account paying 3% compound interest per year - OCR - GCSE Maths - Question 5 - 2019 - Paper 1

For Neil, the amount after 5 years with simple interest is given by the formula:

$A = P + (P imes r imes t)$

Substituting in the values, where $r$ is in decimal form:

$A = 1500 + (1500 \times \frac{r}{100} \times 5)$ $A = 1500 + (75r)$

At the end of the 5th year, both accounts hold the same amount, therefore:

$1738.91 = 1500 + 75r$

To find $r$, rearranging gives:

$75r = 1738.91 - 1500$ $75r = 238.91$ $r = \frac{238.91}{75} \approx 3.18547$

To round the answer to 1 decimal place:

$r \approx 3.2$