Friday, 18 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 4500 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=4500,

4500 = P(1.1)2  

4500 = 1.21P

4500  =  1.21P
1.21       1.21

4500  =  P
1.21      

P = 3719

Hence at the start she invested Tsh 3719


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 100,000 sh at the end of 4 years?


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