Question

Andy promises opie that he will give him 5000 upon his graduation from college at mayberry u. How much must andy invest today to make good on his promise, if opie is expected to graduate in 12 years and andy can earn 5% on his money?

Answer 1

Answer: Andy should invest RS. 2784.19 for 12 years .

Explanation:

Since we have given that

Amount = Rs. 5000

Time = 12 years

Rate of interest = 5%

So, We need to find the sum:

Using "Compound interest" , we get :

`A=P(1+r)^t\\\\5000=P(1+0.05)^(12)\\\\5000=P(1.05)^(12)\\\\(5000)/(1.05^(12))=P\\\\2784.19=P`

Hence, Andy should invest RS. 2784.19 for 12 years .