NZ Level 6 (NZC) Level 1 (NCEA)

Compound Interest - Finding other values

Isabelle is considering whether it would be greatly beneficial for her to invest her money now rather than $5$5 years down the track. For an initial investment of $\$3000$$3000, the function $A=3000\left(1.026\right)^t$`A`=3000(1.026)`t` models how value her money will grow to in $t$`t` years.

Regardless of whether she invests now or in $5$5 years time, she will close the account when she retires (more than $8$8 years in the future).

How many times more will her closing balance be if she starts investing now rather than $5$5 years down the track? Give your answer correct to two decimal places.

Easy

Approx 4 minutes

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Apply everyday compounding rates

Apply numeric reasoning in solving problems