Final amount that Kate wants to have (A) = $25000 Time for which the money needs to be invested (T) = 16 years Rate of interest that Kate will get per year (R) = 6% Let us assume the principal amount (P) = x Then A = P (1 + RT) 25000 = x[1 + {(6/100) * 16}] 25000 = x[1 +(96/100)] 25000 = x[196/100] 196x = 25000 * 100 x = 2500000/196 = 12755.10 dollars So the principal amount that needs to be invested is $12755.10.
