Question

A business was valued at £80000 at the start of 2013. In 5 years the value of this business raised to £95000. this is equivalent to a yearly increase of x%.
Find out the value of x.
give your answer correct to 2 significant figures.​

Answer 1

the yearly increase of x% assumes is compounding yearly, so let's use that.

$~~~~~~ \textit{Compound Interest Earned Amount} \\\\ A=P\left(1+\frac{r}{n}\right)^{nt} \quad \begin{cases} A=\textit{accumulated amount}\dotfill &\£95000\\ P=\textit{original amount deposited}\dotfill &\£80000\\ r=rate\to r\%\to \frac{r}{100}\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{yearly, thus once} \end{array}\dotfill &1\\ t=years\dotfill &5 \end{cases}$

$95000=80000\left(1+\frac{~~ \frac{r}{100}~~}{1}\right)^{1\cdot 5}\implies \cfrac{95000}{80000}=\left( 1+\cfrac{r}{100} \right)^5 \\\\\\ \cfrac{19}{16}=\left( 1+\cfrac{r}{100} \right)^5\implies \sqrt[5]{\cfrac{19}{16}}=1+\cfrac{r}{100}\implies \sqrt[5]{\cfrac{19}{16}}=\cfrac{100+r}{100} \\\\\\ 100\sqrt[5]{\cfrac{19}{16}}=100+r\implies 100\sqrt[5]{\cfrac{19}{16}}-100=r\implies 3.5\approx r$