Problema Solution
David buys a television in the sale for 862.42 dollars. The price of the television has been reduced by 12%.
a) Find the original price of the television.
b) David invests 800 dollars at an annual rate of 3% compound interest. How much would the invesment be worth at the end of 4 years?
Answer provided by our tutors
a) original price after 12% reduction = sale price of $862.42
original price *(12/100) = 862.42
original price * 0.12 = 862.42
original price = 862.42/0.12
original price = $7186.33
b) A = ? the future value and we will suppose that the compounding is done annually since it is not specified in the text
P = $800 is the principal
r = 0.03 or 3% the annual rate
t = 4 year the number of years
m = 1 the number of compounding periods per year
n = m*t = 4 the number of compounding periods
i = r/m = 0.03 interest rate per period
A = P(1 + i)^n
A = 800(1 + 0.03)^4
A = $900.407
after 4 years the investment will be $900.407