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Compound interest question : Elle invests some money into a bank which pays 5% compound interest per year. She wants it to be worth £8000 at the end of 3 years. What is the smallest amount, to the nearest
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1 vote
Compound interest question :

Elle invests some money into a bank which pays 5% compound interest per year. She wants it to be worth £8000 at the end of 3 years. What is the smallest amount, to the nearest £, that she can invest?

User Josh Kidd
by
8.2k points

1 Answer

6 votes
The formula is
A=p (1+r)^t
A future value 8000
P present value?
R interest rate 0.05
T time 3years
Solve the formula for p
P=A÷(1+r)^t
P=8,000÷(1+0.05)^(3)
P=6,910.70

Hope it helps!
User Saurabh Goyal
by
8.7k points
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