Question

Compound interest?

Answer 1

1) Amount A = $100,000.

Rate of interest R = 5%.

Number of years n = 25.

Principle P = ?

A = P(1 + R/100)ⁿ

100000 = P(1 + 5/100)²⁵

100000 = P((100+5)/100)²⁵

100000 = P(105/100)²⁵

100000 = P(21/20)²⁵

100000 = P(1.05)²⁵

100000 = P(1.05)²⁵

100000 = P(3.3863)

P = 100000 / (3.3863) = 29530.75

Therefore P = $29530.75.

2) Principle P = $100,000.

Rate of interest R = 5%.

Number of years n = 25.

Amount A = ?

A = P(1 + R/100)ⁿ

= 100000(1 + 5/100)²⁵

= 100000((100+5)/100)²⁵

= 100000(105/100)²⁵

= 100000(21/20)²⁵

= 100000(1.05)²⁵

= 100000(1.05)²⁵

= 100000(3.3863)

= 338630

Therefore A = $338630.