Question

Sarah invested £12000 in a unit trust five years ago.

The value of the unit trust has increased by 7% per annum for each
of the last 3 years.
Before this, the price had decreased by 3% per annum.
Calculate the current price of the unit trust.
Give your answer to the nearest whole number of pounds.

Answer 1

13832 pounds

Explanation:

For the first two years, the invested 12000 pounds lost its value by 3% per annum.

Therefore, after 2 years the value became
`12000(1 - (3)/(100))^(2) = 11290.8` pounds.

But, for the last three years, the value is increased by 7% per annum.

So, the final value of the investment becomes
`11290.8(1 + (7)/(100))^(3) = 13831.71` pounds ≈ 13832 pounds. (Answer)