SOLUTION: how much would you need to deposit in an account now in order to have $6000 in the account in 15 years? Assume the account earns 8% simple interest. Round your answer to the near

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Question 1055055: how much would you need to deposit in an account now in order to have $6000 in the account in 15 years? Assume the account earns 8% simple interest. Round your answer to the nearest cent.
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
simple interest is not compounded.
it is applied to the original amount only.

the formula for simple interest is i = p * r * n

i is the interest
p is the principal
i is the interest rate per time period
n is the number of time periods

the formula for future value would be.

f = p + i

f is the future value
p is the principal or present value
i is the interest.

when you combine the two formulas, you get:

f = p + p * r * n

you are given that f = 6000.
you are given that n = 15 years
you are given that i = 8% / 100 = .08 per year.

plug those values into the formula and you get:

6000 = p + p * .08 * 15

simplify to get 6000 = p + 1.2 * p

combine like terms to get 6000 = 2.2 * p

divide both sides of this equation by 2.2 to get p = 6000 / 2.2

solve for p to get p = 2727.27 rounded to the nearest cent.

to confirm, start with 2727.27.

use the formula of f = p + p * r * n

replace with what you know to get f = 2727.27 + 2727.27 * .08 * 15

solve for f to get f = 6000 within a small number of cents.