Answer to Question #265096 in Financial Math for Rea

Question

Calculate the principal sum which, if deposited at 9.5% compound interest, will grow to £400 after three years.

What is asked:

What are given:

What is the answer:

Answer 1

Here,

What is asked: principal amount (P)

What are given:

• Interest rate (r)= 9.5% compounded
• Future value (F)= £400
• Timer period (t)= 3 years

According to the given information, answer (principal amount) is:

$=\frac{F}{(1+r)^t}\\=\frac{400}{(1+0.095)^3}\\\frac{400}{1.31293228}\\=304.661539\\=305$