Question

Mr. Shahril invested RM5000 for a donation fund for 5 years. The fund paid a compound interest every year. At the end of the 5th year, he received an amount of RM5800. Find the rate of interest. ​

Answer 1

3%

Explanation:

He starts off with 5000 and ends up with 5800. To summarise:

Year 0: 5000

Year 1: ?

Year 2: ?

Year 3: ?

Year 4: ?

Year 5: 5800

As it is compound interest, we know that the value at the end of the past year is being multiplied by a certain number each year, which is the interest rate.

Therefore, we are multiplying by 'x' each year.

So: 5000 x
`x\\` x
`x\\` x
`x\\` x
`x\\` x
`x\\` = 5800

overall: 5000
`x^5` = 5800

we can now solve this equation:

divide by 5000:
`x^5` =
`(29)/(25)`

5th root: x = 1.03012....

Therefore the value is being multiplied by 1.03 each year, which is an increase of 3%

I hope this helps, feel free to ask if you have any questions :)