Question

Do not round any intermediate computations, and round your answers to the nearest cent.

Answer 1

Given that the rate of interest = r = 5%, time = t = 3 years,

and amount to be made = A = $3000.

And we need to find the principal amount (P).

Then, the formula is

$A=P(1+\frac{r}{100})^t$

Substituting the values we have

$\begin{gathered} 3000=P(1+\frac{5}{100})^3 \\ 3000=P(1+\frac{1}{20})^3 \\ 3000=P(\frac{21}{20})^3 \\ 3000=P\times\frac{21}{20}\times\frac{21}{20}\times\frac{21}{20} \\ P=\frac{3000\times20\times20\times20}{21\times21\times21}=2591.51 \end{gathered}$

Hence, the money to be invested will be $2591.51