Question

A company will need 25,000 in 7 years for a new additon. To meet this goal, the company deposits money into an account today that 3% annual interest compound quarterly. Find the amount that should be invested to total 25,000 in 7 years.

Answer 1

You can use the simple interest formula

`P = irt`

We need P, which is the primary (or principal) investment, and we know that:

rate = 3% (0.03)
time = 7
i = $25000

So, just plug in and solve:

`I = 25000(0.03)(7)`

`I = 5250`

The company needs to invest $5250 today, to make $25000 in 7 years.