Question

A certain sum invested at Compound interest amounts to 8,000 at the end of at 4 years and 9000 at the end of 5 years. What is the principal amount ?​

Answer 1

Amount = P ( 1 + i ) ^ n

Amounts to 8,000 at the end of at 4 years

P ( 1 + i ) ⁴= 8,000

P = 8,000/ (1+i)⁴

amounts to 9,000 at the end of at 5 years

P ( 1 +i )⁵ = 9,000

put the value of p from above

8,000/(1+i)⁴ × (1+i)⁵ = 9,000

8,000 ( 1+i ) = 9,000

8,000 + 8,000 i = 9,000

8,000 i = 9,000 - 8,000

i = 1,000/8,000

i = 1/8

i = 0.125

again put the value of i in equation 1

P = 8,000 / (1.125)⁴

P = 8,000/1.60

P = 5,000

* 5,000 is the principal amount