Question

A man wishes to keep some money in savings de-

Answer 1

Answer:

He needs to deposit N76800 now.

Step-by-step explanation:

The amount of money is compound interest after t years is given by:

$P(t) = P(0)(1+r)^t$

In which P(0) is the initial amount of money invested and r is the interest rate, as a decimal.

25% compound interest so that after 3 years to buy a car for N150000.

This means that:

$t = 3, P(t) = 150000, r = 0.25$. So

$P(t) = P(0)(1+r)^t$

$P(t) = P(0)(1+0.25)^t$

$P(t) = P(0)(1.25)^t$

$150000 = P(0)(1.25)^3$

$P(0) = \frac{150000}{(1.25)^3}$

$P(0) = 76800$

He needs to deposit N76800 now.