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6 November, 06:23

Dylan invested some money in his bank. He agreed a simple interest rate of 3%per annum for a period of 2 years. at the end of 2 year period the value of his investement increased by 72 work out Dylan initial investement

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  1. 6 November, 08:03
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    1200 is Dylan's initial investment.

    Step-by-step explanation:

    Firstly on this type of problem we have two unknowns which are Dylans initial investment and also the future value of the investment but we are going to further give a clear analysis on this simple interest problem by letting X = initial investment then we use the formula: Fv = Pv (1+in), for which this is a simple interest formula now to further explain which values we will substitute in the above mentioned formula;

    Pv is the initial investment that Dylan made which is X

    Fv is the future value of the investment after two years which is X+72

    i is the interest rate of the investment which is 3%

    n is the number of years of the investment which is 2 years

    now we substitute on the above mentioned formula,

    X+72 = X (1+3%x2) now we find the value in brackets

    X+72 = 1.06X now we group like terms

    72 = 1.06X - X

    72 = 0.06X then we divide both sides by 0.06 to get the value of X

    1200 = X

    therefore the initial investment is 1200. The reason behind saying the future value of the investment is X+72 is that we are told on the statement that the investment after two years grows by 72.
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