SOLUTION: I need $1000 dollars for my holidays in 12 months time. I have an instrument yielding 10% interest compounded monthly. How much do I need to invest? A $670 B $1100 C $900 D

Algebra ->  Logarithm Solvers, Trainers and Word Problems -> SOLUTION: I need $1000 dollars for my holidays in 12 months time. I have an instrument yielding 10% interest compounded monthly. How much do I need to invest? A $670 B $1100 C $900 D       Log On


   

Question 124290: I need $1000 dollars for my holidays in 12 months time. I have an instrument yielding 10% interest compounded monthly. How much do I need to invest?
A $670
B $1100
C $900
D $905
E $500
F $890
I'm not sure where to start,any help would be very much appriciated. I would like to see the steps and the correct answer so I'm able to answer these types of word problems in the future. Thank you so much for your time.
Answer by josmiceli(19441) About Me  (Show Source):
You can put this solution on YOUR website!
The equation for compound interest is
A+=+P%281+%2B+%28r%2Fn%29%29%5E%28nt%29
P is the amount invested
r is the compound rate of interest
n is the times per year compounded
t is the time in years
I need $1000, so A+=+1000
1000+=+P%281+%2B+%28.1%2F12%29%29%5E%2812%2A1%29
1000+=+P%281.00833%29%5E12
1000+=+P%2A1.10467
P+=+1000+%2F+1.10467
P+=+905
Yhe answer is (d). You need to invest $905