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Chapter 17: Q.39 (page 427)

How much money do you have to put into a bank account that pays 10% interest compounded annually to have $10,000 in ten years?

Short Answer

Expert verified

Money to be put in bank is$3856.53.

Step by step solution

01

Concept Introduction

Compound interest : It is the addition of interest to the principal sum of loan.

02

Explanation of Solution

Given : A=$10,000,n=10years,r=10%,p=?

Using compound interest formulae,

A=P1+r100n

$10,000=P1+1010010

$10,000=P(1+0.1)10

$10,000=P(1.1)10

$10,000=P(2.593)

P=10,0002.593

=3856.53

Hence, principal is $3856.53.

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