Question

James wants to have earned $6,180 amount of interest in 28 years. Currently he finds

that his annual interest rate is 6.12%. Calculate how much money James needs to invest
as his principal in order to achieve this goal.

Answer 1

$3606.44

Explanation:

The question asks us to calculate the principal amount that needs to be invested in order to earn an interest of $6180 in 28 years at an annual interest rate of 6.12%.

To do this, we need to use the formula for simple interest:

`\boxed{I = (P * R * T)/(100)}`,

where:

I = interest earned

P = principal invested

R = annual interest rate

T = time

By substituting the known values into the formula above and then solving for P, we can calculate the amount that James needs to invest:

`6180 = (P * 6.12 * 28)/(100)`

⇒
`6180 * 100 = P * 171.36` [Multiplying both sides by 100]

⇒
`P = (6180 * 100)/(171.36)` [Dividing both sides of the equation by 171.36]

⇒
`P = \bf 3606.44`

Therefore, James needs to invest $3606.44.