Percentages and Interest

Question

In the question shown in the image, does the question mean that there will be a total increase of $4\%$ each year to the amount in the bond?

So will the answer be $450 \cdot (1.04)^5 = £547.49$ (to the nearest pence)

Answer 1

The answer would be

$$ 450 * 1.02^5 \approx 496.84 $$

At the end of the year they add 2%, which is the same as multiplying by 1.02, this happens for 5 years so you multiply by 1.02 5 times, which is 1.02^5