Question

What is the steps of this equation? (the answer is $908.51). I don't need to know the information. Just how to do the equation and the answer. Thank you!

Answer 1

Step-by-step explanation:

Given:

Final Amount = $1000

Time in years = 3

interest rate = 3.25% = 0.0325

To find the principal amount for the given investment, we use the formula:

`P=(A)/((1+(r)/(n))^(nt))`

Where:

P= Principal Amount

A=Final Amount

r= interest rate in decimal

t=time in years

n= the number of times interest is compounded per unit t

It is mentioned that it is compounded annually, so the value of n=1.

P=1000(1.0325) -³ is from the formula:

We plug in what we know:

`\begin{gathered} P=(A)/((1+(r)/(n))^(nt)) \\ =(1000)/((1+(0.0325)/(1))^((1)(3))) \\ \text{Simplify} \\ =(1000)/((1+0.0325)^3) \\ P=(1000)/((1.0325)^3)=908.51 \\ or \\ P=1000(1.0325)^(-3) \\ \text{Calculate} \\ P=908.51 \end{gathered}`

Therefore, Kyle should invest $908.51