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

£6956.52

Explanation:

Given data

R=5%

A= £8000

T= 3 years

P=???

The compound interest is

A=P(1+r)^t

8000= P(1+0.05)^3

8000= P(1.05)^3

8000= P1.15

P= 8000/1.15

P=6956.52

Hence she needs to invest £6956.52