Question

Simon invested an amount of money in a savings account at 0.5% per annum compound interest. At the end of 3 years, the amount of money in the savings account was £12180.90 Work out how much money Simon invested in the savings account.

Answer 1

Answer:

£12000

Step-by-step:

x*1.005³=12180.9

12180.9/1.005³ = 11999.998

=£12000

Answer 2

The amount of money Simon invested in the savings account is £12000.06

The formula for calculating the compound interest is expressed as:

A = P(1+r)^t where;

A is the amount after 3 years = £12180.90

P is the amount invested (principal)

r is the rate = 0.5% = 0.005

t is the time (in years) = 3years

Substitute the given values into the formula as shown:

12180.90 = P(1+0.005)^3

12180.90 = P(1.005)^3

12180.90 = 1.01508P

P = 12180.90/1.01508

P = 12,000.06

This shows that the amount of money Simon invested in the savings account is £12000.06

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