Question

Cynthia 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. What is the smallest amount , to the nearest pound , she can invest?

Answer 1

$\bf \qquad \textit{Compound Interest Earned Amount}\\\\A=P\left(1+\frac{r}{n}\right)^{nt}\quad \begin{cases}A=\textit{accumulated amount}\to &8000\\P=\textit{original amount deposited}\\r=rate\to 5\%\to \frac{5}{100}\to &0.05\\n=\begin{array}{llll}\textit{times it compounds per year}\\\textit{is only once, so}\end{array}\to &1\\t=years\to &3\end{cases}$

$\bf 8000=P\left(1+\frac{0.05}{1}\right)^{1\cdot 3}\implies 8000=P(1.05)^3\implies \cfrac{8000}{1.05^3}=P\\\\\\6910.70\approx P\implies \stackrel{\textit{rounded up}}{6911 = P}\qquad therefore\qquad 6911~~\leqslant ~~P$