Toni invests money into an account which pays a fixed rate of compound interest each year. The total value, £V, of her investment after t years is given by the formula:

V = 1350 x 1.04^t

Answer questions a & b

a - How much money did Toni invest in pounds

b - What rate of compound interest is paid each year

Question

Mathematics

James

25 March, 06:08

Toni invests money into an account which pays a fixed rate of compound interest each year. The total value, £V, of her investment after t years is given by the formula:

V = 1350 x 1.04^t

Answer questions a & b

a - How much money did Toni invest in pounds

b - What rate of compound interest is paid each year

+5

Answers (1)

Know the Answer?

Hillary Wise · Answer 1

Ok, this is a simple compound interest problem.

For A) your answer is 1350. The initial investment, P, is represented by a whole number.

For B) The compound interest is paid at 4%. Look at 1.04. Remember the formula, and subtract the 1 to find the interest rate