Question

13 At the beginning of 2009, Mr Veale bought a company.

The value of the company was £50 000
Each year the value of the company increased by 2%.
(a) Calculate the value of the company at the beginning of 2017
Give your answer correct to the nearest £100

Answer 1

£58,800

Explanation:

The answer can be calculated using

FV=p(1+r/n)^nt

P=£50,000

r=2%=0.02

n=12

t=2009 to 2017=8 years

FV=p(1+r/n)^nt

=50,000(1+0.02/12)^12*8

=50,000(1+0.0017)^96

=50,000(1.0017)^96

=50,000(1.1771)

=58,855

FV=58,855

To the nearest £100=£58,800