A man wishes to keep some money in a savings deposit at 25% compound interest so that after 3 years he can buy a car for ₦150,000. How much does he need to deposit now?
Worked solution (try it first)
At 25% compound interest the money is multiplied by 1.25 each year, so after 3 years a deposit P becomes P×1.253.
Set this equal to the car price: 1.953125P=150000.