tony invest some money in a bank which pays 4% compound interest per year. he wants it to be worth over £6000 at the end of the 3 years what is the smallest amount, to the nearest pound, he can invest With breakdown please urgently
Answers
Given : tony invest some money in a bank which pays 4% compound interest per year. he wants it to be worth over £6000 at the end of the 3 years
To Find : what is the smallest amount, to the nearest pound,
Solution:
Let say Amount invested = P £
Time = n = 3 Years
R = 4 % per annum
A = 6000 £
A = P(1 + R/100)ⁿ
=> 6000 = P( 1 + 4/100)³
=> 6000 = P (26/25)³
=> P = 6000 * 25³/26³
=> P = 6000 * 25³/26³
=> P = 5,333.97
= 5334 £
smallest amount, to the nearest pound to be invested = 5334
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