Question

A company will need $75000 in 7 years for a new addition. To meet this goal, the company deposits money in an account and hat pays 5% interest compounded annually. Find the amount to the nearest hundred dollars that should be invested to total $75000 in 7 years.

Answer 1

Answer:

The principal needed for new addition is $ 53301.12

Step-by-step explanation:

Given as :

The amount needed for new addition = $75000

The Time period = 7 years

The rate of interest compounded annually = 5 %

Let The Amount invested = P

From compounded Method

Amount = Principal × $(1+\frac{Rate}{100})^{Time}$

Or, $ 75000 = P × $(1+\frac{5}{100})^{7}$

Or, $ 75000 = P × $(1.05)^{7}$

Or, $ 75000 = P × 1.4071

So,  P = $\frac{75000}{1.4071}$ = $ 53301.115

Hence The principal needed for new addition is $ 53301.12  Answer