Question

Ralph invested in a mutual fund and at the end of 20 years he has $14,300 in his account. If the mutual fund returned an average yield of 8%, how much did he originally invest?

Answer 1

`\$5,500`

Explanation:

we know that

The simple interest formula is equal to

`A=P(1+rt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

`t=20\ years\\ P=?\\ A=\$14,300\\r=8\%=8/100=0.08`

substitute in the formula above

`14,300=P(1+0.08*20)`

`14,300=P(2.6)`

`P=14,300/(2.6)`

`P=\$5,500`