If Sheila wants to earn 10% annual simple interest on an investment, how much should she invest (today) so that it's value is worth
$20, 000 in 15 months
What re the answer choices? Btw you have to hurry I have to go to school in an hour :3 (if you have them) but I’ll try to help!
I’m home from school now loll
And srry I don’t know it :(
To find out how much Sheila should invest today to reach a value of $20,000 in 15 months with a 10% annual simple interest rate, we need to use the formula for simple interest:
Interest = Principal * Rate * Time
Where:
- Principal is the initial amount invested
- Rate is the interest rate per period (in this case, per year)
- Time is the number of periods
In this scenario, we are looking to find the principal, so we can rearrange the formula:
Principal = Interest / (Rate * Time)
Now, let's plug in the given values:
Rate = 10% = 0.10 (converted to decimal)
Time = 15 months = 15/12 years (converted to years, assuming each month has an average of 30 days)
Now, we can calculate the principal:
Principal = $20,000 / (0.10 * 15/12)
Principal = $20,000 / (0.10 * 1.25)
Principal = $20,000 / 0.125
Principal = $160,000
Therefore, Sheila should invest $160,000 today to have a value of $20,000 in 15 months, with a 10% annual simple interest rate.