How many GBP would you have to invest at 0.55% to be repaid GBP 2,000,000.00 (principal plus interest) in 90 days?
A) GBP 1,997,253.78
B) GBP 1,997,291.34
C) GBP 1,997,287.67
D) GBP 1,997,250.00

Question

Quizplus · Accepted Answer

We can use the formula A = P(1 + rt) to solve for the principal, where A is the total amount (principal plus interest), P is the principal, r is the interest rate, and t is the time in years. Converting 90 days to years, we get t = 90/365 = 0.2466. Plugging in the given values, we get:

2,000,000 = P(1 + 0.0055*0.2466)
P = 1,997,291.34

Therefore, we would need to invest GBP 1,997,291.34 to be repaid GBP 2,000,000.00 (principal plus interest) in 90 days. Choice B is the correct answer.

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