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 - Page 512: 21


$P \approx \$5,172.41$

Work Step by Step

RECALL: The formula for the future value $A$ is: $A=P(1+rt)$ where P= principal amount borrowed r = interest rate per year t = time in years Divide $(1+rt)$ on both sides of the formula given above to obtain: $\dfrac{A}{1+rt}=P$ Thus, the principal can be found using the formula above. Use the formula above and the given values in the problem to obtain: $P=\dfrac{\$6000}{1+8\% \cdot 2} \\P=\dfrac{\$6000}{1+0.08 \cdot 2} \\P=\dfrac{\$6000}{1+0.16} \\P=\dfrac{\$6000}{1.16} \\P=\$5,172.413793 \\P \approx \$5,172.41$
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