COMPOUND INTEREST F1

Mwakajonga invested a certain amount of money in a bank which gives an interest rate of 20% compounded annually. How much did she invest at the start if she got 20,000 sh at the end of 3 years?

 

Solution

 

n=3, t=1, R=20%, A₃=8,500, P=?

A_n = P(1 + ^RT/100)ⁿ

A₃ = P(1 + ^(20x1)/100)³

A₃= P(1 + ²⁰/100)³

A₃ = P(¹⁰⁰/100 + ²⁰/100)³

A₃ = P(¹²⁰/100)³  But A₃=20,000.

20,000 = P(1.2)³  = P(1.2x1.2x1.2)  

 

20,000 = 1.728P

 

20000  =  1.728P

1.728       1.728

 

20000  =  P

1.728

 

P ≈ 11574/=

 

Hence at the start she invested Tsh 11574/=

 

TRY THIS………………..

 

 

Tunsubilege invested a certain amount of money in a bank which gives an interest rate of 20% compounded annually. How much did she invest at the start if she got 16,000 sh at the end of 5 years?