O lvl E Maths: Applications in Practical Situations

John invest $4750 in a bank that pays a compound interest at the rate of n% per year, Find the value of n if John has $6250 after 7 years.

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Answer:

P(1+r/100)ⁿ

Principle = $4750
Rate = n
Years = 7

Thus,

4750 (1 + n/100)⁷ = 6250
(1 + n/100)⁷ = 6250/4750
1 + n/100 = 7√(6250/4750)
n/100 = 1.039988 - 1
n = 0.039988 x 100
n ≈ 4