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Popular Word Problems >

Question 7 How much should I invest now into an account paying 4% p.a. compounded interest if I want the investment to have a value of K20 000 in 2 years, time? (2marks)

Solution

Q u es t i o n 7 Ho w m u c h s h o u l d I in v es t n o w in t o an a cco u n t p a y in g 4% p . a . co m p o u n d e d in t eres t i f I w an t t h e in v es t m e n t t o ha v e a v a l u e o f K 20000 in 2 ye a rs, t im e ? (2 ma r k s)

Solution

Principal : 18491.12

Solution steps

Translate the problem into an equation:

20000 = P (1 + \frac{0.04}{1})^{1 \cdot 2}

Solve for

P, 20000 = P (1 + \frac{0.04}{1})^{1 \cdot 2} : P = 18491.12

Principal : 18491.12

Popular Examples

Half of a number,two increased by the product of a number and 8 is less than 19 Harold deposited 70 in an account earning 5% interest compounded annually.To the nearest cent, how much interest will he earn in 2 years?Find the compound amount for the deposit and the amount of interested earned.\15, 000 at %5 compounded monthly for 18 years.You would like to have 5, 000.00 in a savings account after 5 years. Your savings account has a 9.5% interest rate, compounded quarterly. How much must you deposit in that account now to reach your goal?