Find the
compound interest on sh 4000 invested at 5% per annum after 4 years.
Solution
P= 4000/=,
R=5%, T=1, n=4, A4=?, I=?
An
= P(1 + RT/100)n
A4
= 4000(1 + (5x1)/100)4
A4=
4000(1 + 5/100)4
A4
= 4000(100/100 + 5/100)4
A4
= 4000(105/100)4
A4
= 4000(1.05)4
We use
logarithm tables to calculate A4
|
NO
|
LOG
|
|
|
4000 = 4.0 X
103
1.05 = 1.05
X 100
|
3. 6021
0. 2119 x 4 =
0.8476
|
3.6021
+ 0.8476
|
|
2.8616 x 104
Answer
|
|
4.4497
We check 4.4497 in the table of antilogarithms.
|
A4
= 2.8616 x 104
A4
= 28616
Compound
interest = Amount(A4) – Principal(P)
= 28616 –
4000
= 24616
Hence the compound interest is sh. 24616/=
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