How much to the nearest dollar should you deposit in a savings account at 4% annual simple interest in order to have a balance of 20,000 after five years?

Solution

How much to the nearest dollar should you deposit in a savings account at 4% annual simple interest in order to have a balance of 20, 000 after five years?

Solution

Principal : 16666.67

Solution steps

Translate the problem into an equation:

20000 = P (1 + 0.04 \cdot 5)

Solve for

P, 20000 = P (1 + 0.04 \cdot 5) : P = 16666.67

Principal : 16666.67

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