Question

2. What amount of money must Kurt Blixen invest at 4.75% to have it earn $10,000 in 90 days?

Answer 1

Kurt Blixen must invest $85,2296.94.

Given the following data;

• Interest rate = 4.75%

• Simple interest = $10,000

• Time = 90 days

To find how much money Kurt Blixen must invest;

Mathematically, simple interest is given by the formula;

$S.I = \frac{PRT}{100}$

Where:

• S.I is the simple interest.

• P is the principal amount.

• R is the interest rate.

• T is the time measured in years.

First of all, we would convert the time in days to years.

Conversion:

365 days = 1 year

90 days = x year

Cross-multiplying, we have;

$365 * x = 90\\\\x = \frac{90}{365}$

x = 0.247 year

Making P the subject of formula;

$P = \frac{S.I(100)}{RT}$

Substituting the values into the formula, we have;

$P = \frac{10000(100)}{4.75*0.247}\\\\P = \frac{1000000}{1.1733}$

P = $85,2296.94

Therefore, Kurt Blixen must invest $85,2296.94.

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