Explanation: Let X be the amount of Avery's investment. Since she will receive $40,000 every year for the next six years, the most she will earn is $40,000 × 6 = $240,000.
Since she wants to earn 12% on her investment, her earnings is equal to 12% of X = 0.12X. Since the most she will earn is $240,000,
0.12X ≤ 240,000 X ≤ 240,000 ÷ 0.12 = 2,000,000 (Divide both sides by 0.12)
Hence X ≤ 2,000,000. Therefore, the most amount she should invest is $2,000,000.
So in 6 months (1/2yr) you earned $15.75 interest, if we double that we find the total interest you would gain for that year, 15.75x2= $31.5 total interest for that year.
To find the annual rate divide the interest gained by the amount deposited, 31.5/500 = 0.063% p.a.
