SECTION B: BANK ACCOUNTS

Bank accounts

The Central Cornerstone Bank has a number of different savings accounts.

Account name Rate of interest
Eighteen Carat Account 3.22% paid annually
Nine Carat Account 1.59% paid every 6 months
Benchmark Account 0.78% paid every 3 months
Instant Access 0.1% paid annually

Interest earned is rounded to the nearest penny.


Question

Matt deposits £2800.00 in the Nine Carat Account account for 12 months. It earns compound interest at the rate of 1.59% paid every 6 months.

 Starting value (£)Interest (£)Final value (£)
First 6 months2800.0044.52
Second 6 months

Interest is rounded to the nearest penny.

Complete the table above.

Write down the total interest which Matt has received in the year.


Hence calculate the AER on this investment.
%