The monthly payment is given to be £200. This means that the total amount paid in 12 months will be:
[tex]12\times200=\pounds2400[/tex]The amount in the account after 12 months can be calculated using the formula:
[tex]A=\frac{Pr(r^n-1)}{r-1}[/tex]From the question, we have the following parameters:
[tex]\begin{gathered} P=200 \\ r=1.005 \\ n=12 \end{gathered}[/tex]Therefore, the amount will be:
[tex]\begin{gathered} A=\frac{200\times1.005(1.005^{12}-1)}{0.005} \\ A=2479.45 \end{gathered}[/tex]Therefore, the interest will be calculated to be:
[tex]\begin{gathered} I=2479.45-2400 \\ I=79.45 \end{gathered}[/tex]The interest paid is £79.45.
