Question

Alex invests ?4000 for 7 years. His investment pays compound interest of x% per annum. At the end of the 7 years Alex's investment is worth ?5263.73 Work out the value of x

Answer 1

x=4

Explanation:

Answer 2

The value of x is 4%

Explanation:

Given principal amount = 4000

Time = 7 years

Future amount = 5,263.73

Rate of interest = x

Formula for compound interest

`A=P(1+(r)/(n))^(nt)`

Now put the values in the formula

`5,263.73=4000(1+(x)/(1))^(1* 7)`

`5,263.73=4000(1+(x)/(1))^(7)`

`5,263.73=4000(1+x)^(7)`

`(5263.70)/(4000)=(1+x)^7`

`1.3159=(1+x)^7`

`(1.3159)^{(1)/(7)}=1+x`

`x=(1.3159)^{(1)/(7)}-1`

x = 1.04 - 1

x = 0.04 or 4%

The value of x is 4%