Question

A sum is invested in a building society at 4% interest per annum and after 3 years

the value of the investment is £562.43. How much was originally invested?

Answer 1

Original value of investment = £500 (Approx.)

Explanation:

Given:

Rate per year = 4%

Number of year = 3 years

Value of investment after 3 year = £562.43

Find:

Original value of investment

Computation:

A = P[1+r]ⁿ

562.43 = P[1+4%]³

562.43 = P[1+0.04]³

562.43 = P[1.04]³

562.43 = P[1.1248]

Original value of investment = 562.43 / 1.1248

Original value of investment = 500.026

Original value of investment = £500 (Approx.)