Question

Each of the following situations is independent. Work out your own solution to each situation, and then check it against the solution provided.The Morgans would like to send their daughter to a music camp at the end of each of the next five years. The camp costs $1,000 a year. What lump-sum amount would have to be invested now to have $1,000 at the end of each year if the rate of return is:Twelve percent?

Answer 1

Morgan will get $1600 with the process of simple interest.

what is simple interest?

Simple interest is calculated based on a loan's principal or the initial deposit into a savings account. Simple interest doesn't compound, therefore a creditor will only charge interest on the principal sum, and a borrower will never be required to pay further interest on the interest that has already accrued.

Rate of interest = 12%

principal = $1000

Time = 5 years

Simple interest

$=\frac{1000 \times 5 \times 12}{100}\\=600$

Now amount = 1000+600 = 1600.

Therefore, Morgan will get $1600.

To learn more about simple interest from the given link

brainly.com/question/25793394

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