Answer:
Explanation:
Given:
Final Amount = $1000
Time in years = 3
interest rate = 3.25% = 0.0325
To find the principal amount for the given investment, we use the formula:
[tex]P=\frac{A}{(1+\frac{r}{n})^{nt}}[/tex]
Where:
P= Principal Amount
A=Final Amount
r= interest rate in decimal
t=time in years
n= the number of times interest is compounded per unit t
It is mentioned that it is compounded annually, so the value of n=1.
P=1000(1.0325) -³ is from the formula:
We plug in what we know:
[tex]\begin{gathered} P=\frac{A}{(1+\frac{r}{n})^{nt}} \\ =\frac{1000}{(1+\frac{0.0325}{1})^{(1)(3)}} \\ \text{Simplify} \\ =\frac{1000}{(1+0.0325)^3} \\ P=\frac{1000}{(1.0325)^3}=908.51 \\ or \\ P=1000(1.0325)^{-3} \\ \text{Calculate} \\ P=908.51 \end{gathered}[/tex]
Therefore, Kyle should invest $908.51
