Madalyn wants to buy a dollar-sign 700 stereo set in 9 months. How much should she invest at 5 % simple interest to have the money then?
x(1 + .05(9/12) ) = 700
solve for x
To find out how much Madalyn should invest at 5% simple interest in order to have the $700 needed in 9 months, we can use the formula for simple interest:
Interest = Principal × Rate × Time
Here, the principal is the amount Madalyn should invest, the rate is 5% (expressed as 0.05 in decimal form), and the time is 9 months (expressed as 9/12 years, since interest is typically calculated on an annual basis). The interest in this scenario is the difference between the final amount ($700) and the principal.
So, using the formula:
Interest = Principal × Rate × Time
700 - Principal = Principal × 0.05 × (9/12)
Now, we can solve this equation to find the required principal amount.