Question

3. Bob the Builder wants to earn an annual rate of 10% on his investments,

Answer 1

Answer:

He should pay $2,790.7.

Step-by-step explanation:

This is a simple interest problem.

The simple interest formula is given by:

$E = P*I*t$

In which E is the amount of interest earned, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time, in years.

After t years, the total amount of money is:

$T = E + P$

In this question:

Rate of 10%, so I = 0.1.

9 months, so $t = \frac{9}{12} = 0.75$

How much should he pay for a note that will be worth $3,000 in 9 months?

We have to find P for which T = 3000. So

$T = E + P$

$3000 = E + P$

$E = 3000 - P$

Then

$E = P*I*t$

$3000 - P = P*0.1*0.75$

$1.075P = 3000$

$P = \frac{3000}{1.075}$

$P = 2790.7$

He should pay $2,790.7.