Question

Dylan invested some money in the bank. He agreed a simple interest rate of 3% per annum for a Period of 2 years. At the end of the 2 year period the value of his investment increased by £72. Work out the value of Dylan’s initial investment

Answer 1

initial investment=£1200

Explanation:

Interest = Principal * interest rate * time(yearly)

£72=principal * 3% *2

principal = £1200

Answer 2

Answer: £1200

Explanation:

The formula to find simple interest:
`I=Prt`, where P is the initial amount , r is the rate of interest (in decimal) and t is time . (1)

Given : Dylan agreed a simple interest rate of 3% per annum for a Period of 2 years. At the end of the 2 year period the value of his investment increased by £72.

i.e. r= 3% = 0.03 ; t=2 ; I=£72

Substitute all the values in (1), we get

`72=P(0.03)(2)\\\\\Rightarrow\ P=(72)/(2*0.03)=1200`

Hence, the Dylan’s initial investment = £1200