This problem is about calculating the future value of an investment using compound interest. The formula for compound interest is:

$A = P \left(1 + \frac{r}{100}\right)^t$

Where:

• $A$ is the amount after time $t$,
• $P$ is the principal (initial investment),
• $r$ is the annual interest rate (as a percentage),
• $t$ is the time in years.

In this case:

• $P = £1283$,
• $r = 7.4\%$,
• $t = 5$ years.

Let's calculate the investment's worth after 5 years:

$A = 1283 \left(1 + \frac{7.4}{100}\right)^5$ $A = 1283 \left(1.074\right)^5$ $A \approx 1283 \times 1.429857$ $A \approx 1834.37$

So, the investment will be worth approximately £1834.37 after 5 years.

Do you want any more details or have any further questions?

Here are 5 related questions for further practice:

1. What would the investment be worth after 10 years at the same rate?
2. If the interest rate was reduced to 5%, what would be the value after 5 years?
3. How much interest would Tom earn after 5 years with the original rate?
4. If Tom invested £2000 at 7.4% for 5 years, what would the final value be?
5. What is the formula for continuous compound interest, and how would it change the result?

Tip: Compound interest grows faster over time, especially as the interest rate or time increases.