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HW17: Problem 2 Previous Problem Problem List Next Problem (4 points) Charlie wants to buy a $300 stereo set in 9 weeks. How much should he invest now at 11% annual simple interest to have the money in 9 weeks? Investment = $ Preview My Answers Submit Answers You have attempted this problem 0 times. You have unlimited attempts remaining.

Answer 1

Annual simple interest rate (for 52 weeks) = 11%

Therefore simple interest rate for 9 weeks = (9/52) * 11% = 1.904%

We know the future value (FV) of investments after 9 weeks is $300

By using Simple Interest Method:

FV= PV * (1+ 9 week’s interest rate)

Or

PV = FV / (1+ 9 week’s interest rate)

Where, PV is the present value of investment

Therefore,

PV = $300 / (1+ 1.904%)

= $300 / (1.01904) = $294.40

Therefore required investment today is $294.40