Question

Lily has an account that pays 3.48% simpleinterest per year and wants to accumulate$4,000 in interest from it over the next 12years. How much money should Lily investin this account to meet her goal?

Answer 1

Given:

a.) Lily has an account that pays 3.48% simple interest per year.

b.) She wants to accumulate $4,000 in interest from it over the next 12 years.

For us to be able to determine how much money should Lily invest in this account, we will be using the simple interest formula:

`\text{ I = Prt}`

Where,

I = The interest

P = Principal (Initial value)

r = Interest rate (In decimal)

t = Time (In years)

We get,

`\text{ I = Prt}`
`\text{ 4,000 = }P((3.48)/(100))(12)`
`\text{ 4,000 = P}(0.0348)(12)`
`\text{ P = }(4000)/((0.0348)(12))`
`\text{ P = }(4000)/((0.0348)(12))\text{ }\approx\text{ \$9,578.54}`

Therefore, Lily should invest $9,578.54 to meet her goal.