Question

Cynthia invests some money in a bank which pays

5% compound interest per year.
She wants it to be worth over £8000 at the end of 3 years.
What is the smallest amount, to the nearest pound, she can invest?

Answer 1

Answer: £6910.7

Explanation:

Given

Rate
`R=5\ \%`

Amount
`A=`£
`8000`

Time
`T=3\ years`

In compound interest, the Amount is given by

`A=P[1+(R)/(100)]^T`

`8000=P[1+(5)/(100)]^3`

`P=(8000)/(1.1576)`

`P=`£
`6910.7`