Answer:
[tex]\huge\boxed{2400}[/tex]
Useful Information:
The formula for compound interest is: [tex]initial.amount*interest.rate^{no.years}[/tex]
Step-by-step explanation:
To work this out, you would first have to convert the percentage into a decimal. You can do this by dividing the percentage of 5% by 100, which gives you 0.05. This is because percentages are out of 100.
The next step is to add 1 to 0.05, this gives you 1.05. This is because you are working out the percentage increase.
The next step is to substitute the values into the formula. This gives you[tex]initial.amount*1.05^{3}=2778.30[/tex]
To work out the initial value, you would divide the final amount of 2778.30 by [tex]1.05^3[/tex], which gives you 2400. This is because you are rearranging the formula to find the initial investment.
1) Divide 5 by 100.
[tex]\frac{5}{100}=0.05[/tex]
2) Add 1 to 0.05.
[tex]1+0.05=1.05[/tex]
3) Substitute the values into the formula.
[tex]initial.amount*1.05^{3}=2778.30[/tex]
4) Divide 2778.30 by [tex]1.05^3[/tex].
[tex]\frac{2778.30}{1.05^3}=2400[/tex]