How much principal must be invested to earn 5,000 in 6 years at an interest rate of 5%
Answer (1)
We can use the simple interest formula to solve this:Simple Interest Formula: [tex]$\sf{i=p \times r\times t}$[/tex]Where:I = Interest earned ($5,000)P = Principal (what we need to find)r = Interest rate (5% or 0.05 as a decimal)t = Time in years (6 years)Let's rearrange the formula to solve for P (Principal):[tex]$\sf{P=\frac{i}{(r\times t)}}$[/tex]Now, substitute the known values:P = [tex]$\sf{\frac{\$5000 }{(0.05 \times 6) }}$[/tex]P = [tex]$\sf{\frac{\$5000}{0.3}}$[/tex]P = [tex]$\sf{\$16,666.67}$[/tex] (approximately)Final answer:Therefore, approximately $16,666.67 must be invested to earn $5,000 in 6 years at a 5% interest rate.
