Cythia invests some money in a bank which pays 5% compound interest per year. she wants it to be worth over £8000 at the end of 3 years.

Question

what is the smallest amount ,to the nearest pound she can invest?

 

Answer 1

Compound Interest Formula:

A = P (1 + r/n)^(nt)

A = future value
P = initial investment
r = annual interest rate
n = the number of times that interest is compounded per year
t = the number of years the money is invested for

A = 8000
P = x (What we're solving for)
r = 5% = 0.05
n = 1
t = 3

8000 = x(1 + 0.05/1)^(1*3)
8000 = x(1.05)³

Solve for X. Remember to round to the nearest pound.

Answer 2

8000 = p(1 + 0.05)³

 

Can you solve for p and answer?