Question

A company will need $75000 in 7 years for a new addition. To meet this goal, the company deposits money in an account and hat pays 5% interest compounded annually. Find the amount to the nearest hundred dollars that should be invested to total $75000 in 7 years.

Answer 1

The principal needed for new addition is $ 53301.12

Explanation:

Given as :

The amount needed for new addition = $75000

The Time period = 7 years

The rate of interest compounded annually = 5 %

Let The Amount invested = P

From compounded Method

Amount = Principal ×
`(1+(Rate)/(100))^(Time)`

Or, $ 75000 = P ×
`(1+(5)/(100))^(7)`

Or, $ 75000 = P ×
`(1.05)^(7)`

Or, $ 75000 = P × 1.4071

So, P =
`(75000)/(1.4071)` = $ 53301.115

Hence The principal needed for new addition is $ 53301.12 Answer