Naoby invests £6000 for 5 years. The investment gets compound interest of x% per annum. At the end of 5 years the investment is worth £8029.35 Work out the value of x.
The answer to the question can take a backwards approach. i.e. in order for you to make £8029.35 in 5 years from £6000, what does the yearly interest need to be.Since the interest is compounded, the yearly interest rate 'x' must be the same.The formula would be:8029.35 = 6000 * (1 + x)^5=> 8029.35/6000 = (1 + x)^55th root of 8029.35/6000 = (1 + x)=> x = 1 - 5th root of 8029.35/6000=> x = 0.059999 = 6.0%
AL
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