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What principal would you need to invest at a rate of 7% to earn 500$ in 9 months?

What Principal Would You Need To Invest At A Rate Of 7 To Earn 500 In 9 Months class=

Sagot :

Simple interest formula

[tex]A=P(1+rt)[/tex]

where,

A=final amount

P=initial principal balance

r=annual interest rate

t=time (in years)

In this example,

A = $500

r = 7% = 0.07

t = 9 months

Replacing, we get:

[tex]500=P(1+0.07\cdot9)[/tex]

therefore, the principal would be: P = $306.75

[tex]P=\frac{500}{1+0.07\cdot9}=\frac{500}{1.63}=306.75[/tex]

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