Friday, 29 August 2014

COMPOUND INTEREST 2




Salma invested a certain amount of money in a bank which gives an interest rate of 10% compounded annually. How much did she invest at the start if she got 4000 sh at the end of 2 years?

Solution

n=2, t=1, R=10%, A2=4000, P=?
An = P(1 + RT/100)n
A2 = P(1 + (10x1)/100)2
A2 = P(1 + 10/100)2
A2 = P(100/100 + 10/100)2
A2 = P(110/100)2  But A2=4000,
4000 = P(1.1)2  
4000 = 1.21P
4000  =  1.21P
1.21       1.21

4000  =  P
1.21      

P = 3305.79

Hence at the start she invested Tsh 3305.79

TRY THIS………………………
Nishita invested a certain amount of money in a bank which gives an interest rate of 6% compounded annually. How much did she invest at the start if she got 6000 sh at the end of 4 years?

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