Wanjiru invests KSh 100000 at 10% per annum compound interest. How much is it worth after 3 years?

Answer and explanation

Correct answer: A. KSh 133100

  1. Step 1: Use A = P(1 + r/100)^n = 100000 x (1.1)^3. Step 2. A = KSh 133100. Answer: KSh 133100. Why not the others: KSh 130000: That uses simple interest, which does not add earlier interest to the amount. KSh 30000: That is only the total simple interest, not the amount. KSh 33100: That is the compound interest earned, without the original sum.

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