Given:
The final amount is A = 125 kina.
The rate of interest is r = 4 1/4%.
The number of years is t = 6 years.
The objective is to find the initial amount to be invested.
Explanation:
The rate of interest can be converted as,
[tex]\begin{gathered} r=4\frac{1}{4}\text{ \%} \\ =\frac{16+1}{4}\text{ \%} \\ =\frac{17}{4} \\ =4.25\text{ \%} \\ =0.0425 \end{gathered}[/tex]The general formula to find the amount obtained by simple interest is,
[tex]\begin{gathered} A=P(1+rt) \\ P=\frac{A}{(1+rt)}\text{ . . . . (1)} \end{gathered}[/tex]To find P :
On plugging the given values in equation (1),
[tex]\begin{gathered} P=\frac{125}{(1+0.0425(6))} \\ =\frac{125}{1.255} \\ =99.6015\ldots \\ \approx99.6 \end{gathered}[/tex]Hence, the principal amount to be invested is 99.6 kina.
