jasmime wants to earn 2,000 in simple imterest through a bank account earning 5% annually. how, uch principal would she need to invest in the account to meet her interest goal in 4 years

Question

Business

Rebecca Higgins

22 April, 00:05

jasmime wants to earn 2,000 in simple imterest through a bank account earning 5% annually. how, uch principal would she need to invest in the account to meet her interest goal in 4 years

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Answers (1)

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Kamila Preston · Answer 1

To reach the goal, the initial investment should be of: $1,645.40

Explanation:

Giving the following information:

Jasmine wants to earn 2,000 in simple interest through a bank account earning 5% annually.

To calculate the initial investment, we need to use a variation of the simple interest future value formula:

FV = PV * (1+i) ^n

PV = present value

Isolating PV:

PV = FV / (1+i) ^n

PV = 2,000 / (1.05^4) = 1,645.40