Thinking Mathematically (6th Edition)

Published by Pearson
ISBN 10: 0321867327
ISBN 13: 978-0-32186-732-2

Chapter 8 - Personal Finance - 8.3 Simple Interest - Exercise Set 8.3: 38

Answer

The present value $P$ that must be invested is $\$7207.21$

Work Step by Step

This is the formula we use when we make calculations with simple interest: $A = P~(1+rt)$ $A$ is the future value $P$ is the present value $r$ is the interest rate $t$ is the number of years We can find the present value $P$ that must be invested. $A = P~(1+rt)$ $P = \frac{A}{1+rt}$ $P = \frac{\$8000}{1+(0.055)(2)}$ $P = \$7207.21$ The present value $P$ that must be invested is $\$7207.21$
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