Wednesday, 2 November 2016

COMPOUND INTEREST 1


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 10,000 sh at the end of 2 years?

solution

n=2, T=1, R=10%, A2=8000, 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=8000,

10,000 = P(1.1)2  

10,000 = 1.21P

10,000  =  1.21P
1.21       1.21

10,000  =  P
  1.21       

P = 8264.46


Hence at the start she invested Tsh 8264.46

TRY THIS……………………..


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 15,000 sh at the end of 3 years?

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