Charlie wants to buy a $1000 TV in 9 months. How much should he invest now at 13% simple interest to have the money in 9 months?
To find out how much Charlie should invest now at 13% simple interest to have $1000 in 9 months, we can use the formula for simple interest:
I = P * r * t
Where:
I = Interest earned
P = Principal amount (initial investment)
r = Interest rate (in decimal form)
t = Time (in years)
In this case, we have:
I = $1000 - P (since he wants to have $1000 in the end)
r = 13% = 0.13 (0.13 is the decimal form of 13%)
t = 9 months = 9/12 = 0.75 years (converted to years)
Now we can rearrange the formula to solve for P:
P = (I / (r * t))
Substituting the given values:
P = ($1000 - P) / (0.13 * 0.75)
To solve for P, we can simplify the equation:
P = ($1000 - P) / 0.0975
Now, let's isolate P:
P * 0.0975 = $1000 - P
0.0975P = $1000 - P
0.0975P + P = $1000
1.0975P = $1000
P = $1000 / 1.0975
P ≈ $911.75
Therefore, Charlie should invest approximately $911.75 now at 13% simple interest to have $1000 in 9 months.