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 3years.
What is the smallest amount to nearest pound she can invest?​

Answer 1

£6,910.70

Explanation:

The computation of the amount invested is given below:

As we know that

Amount = Principal × (1 + rate of interest)^number of years

£8000 = Principal × (1 + 0.05)^3

£8000 = Principal × 1.05^3

£8000 = Principal × 1.157625

So, the principal amount is

= £8000 ÷ 1.157625

= £6,910.70