SOLUTION: Jasmine wants to earn $2000 in simple interest through a bank account earning 5% annually. How much principal would she need to invest in the account to meet her interest goal in 4

Question 1092114: Jasmine wants to earn $2000 in simple interest through a bank account earning 5% annually. How much principal would she need to invest in the account to meet her interest goal in 4 yrs?
Answer by ikleyn(52794) (Show Source): You can put this solution on YOUR website!
.

Let x be her principal. Then her account grows each year according the formula

A = x*(1+0.05)^t = x*1.05^t:

t, year   Account

1         1.05x
2         1.05^2*x = 1.1025*x
3         1.05^3*x = 1.1576*x
4         1.05^4*x = 1.2155*x


So, if she wants to earn $2000 as simple interest in 4 years, her principle must be


1.2155x - x = 2000  ====>  (1.2155-1)*x = 2000  ====>  x =  = $9280.74   (or $9280.75 ?).

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