Finding the Value of an Investment Made in 1880

In 1880 five aboriginal trackers were each promised the equivalent of 100 Australian dollars for helping to capture the notorious outlaw Ned Kelley. In 1993 the granddaughters of two of the trackers claimed that this reward had not been paid. The Victorian prime minister stated that if this was true, the government would be happy to pay the $100. However, the granddaughters also claimed that they were entitled to compound interest. 

• a. How much was each granddaughter entitled to if the interest rate was 4%? 
• b. How much was each entitled to if the interest rate was 8%?

Solution: