Charlie wants to buy a $500 TV in 8 months. How much should he invest now at 4% simple interest to have the money in 8 months?
To find out how much Charlie should invest now, we can use the simple interest formula:
Interest = Principal × Rate × Time
We know that the principal (the initial amount Charlie should invest), the rate (4%), and the time (8 months) are given. We need to rearrange the formula to solve for the principal amount.
Principal = Interest / (Rate × Time)
In this case, the interest is the amount needed to reach $500, so:
Interest = $500
Rate = 4% = 0.04 (converted to decimal)
Time = 8 months
Now we can plug these values into the formula:
Principal = $500 / (0.04 × 8)
Principal = $500 / 0.32
Principal ≈ $1562.50
Therefore, Charlie should invest approximately $1562.50 to have $500 in 8 months.