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James wants to receive R54 800 after a 10-year investment period. How much must he invest if he receives an interest rate of 18% compounded annually?
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$P = \text{R10 470.33}$

Explanation

James wants to receive R54 800 after a 10-year investment period. How much must he invest if he receives an interest rate of 18% compounded annually?

The formula for compound interest is:

$A = P(1 + i)^n$

$A=R54800; n=10 ; i=0.18$

$54800 = P(1+0.18)^{10}$

$\dfrac{54800}{(1+0.18)^{10}} = P$

therefore

$P = \text{R10 470.33}$

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