Robert Kelly wants to start a business in 10 years. He hopes to have $100,000 at that time to invest in the business. To reach his goal, he plans to invest a certain amount today in a bank CD that will pay him 9.50 percent annually. How much will he have to invest today to achieve his target? (Round to the nearest dollar.)
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Ответ:
$40,351
Explanation:
Given that,
Amount of money to invest at that time = $100,000
Annual rate of interest = 9.50%
Time period, n = 10 years
Here, we assume that interest is compounded annually.
Amount = Principal × (1 + Interest rate)^n
$100,000 = Principal × (1 + 0.0950)^(10)
$100,000 = Principal × (1.095)^(10)
$100,000 = Principal × 2.47822761
$100,000 ÷ 2.47822761 = Principal
$40,351.4187 or $40,351 = Principal
Therefore, he have to invest $40,351 today to achieve his target.
Ответ:
Criterion-related
Explanation: