Question

Compound interest question :

Elle invests some money into a bank which pays 5% compound interest per year. She wants it to be worth £8000 at the end of 3 years. What is the smallest amount, to the nearest £, that she can invest?

Answer 1

The formula is
A=p (1+r)^t
A future value 8000
P present value?
R interest rate 0.05
T time 3years
Solve the formula for p
P=A÷(1+r)^t
P=8,000÷(1+0.05)^(3)
P=6,910.70

Hope it helps!