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Homework Help: Compond interest word problem

  1. Sep 30, 2008 #1
    1. The problem statement, all variables and given/known data
    If the total interest earned on an investment at 8.2% compounded semiannually for 8.5 years was $1,175.98, what was the original investment?


    2. Relevant equations
    A=P(1+i)^n


    3. The attempt at a solution
     
  2. jcsd
  3. Sep 30, 2008 #2

    statdad

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    Homework Helper

    You need to show a little work. To get started, make a list of all the quantities (P, A, i, and n) you are given in the problem; that will show you which you need to find (and may guide you to the solution process to boot)
     
  4. Sep 30, 2008 #3
    Thank you Statdad!

    This is what I had:
    n = 17
    i= 0.041
    P= P + $1,175.98
    Am I on the right track. If I am I come out with this awkward looking formula:
    P+$1,175.98 = P(1+i)^n
    If this is correct then what?
    Many thanks
     
  5. Sep 30, 2008 #4

    statdad

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    Homework Helper

    Great!
    Yes, your final line

    [tex]
    P + 1175.98 = P(1.041)^{17}
    [/tex]

    is good. If you think about this, it is simply a linear equation with [tex] P [/tex] as the variable. All you need to do is rearrange terms and solve for [tex] P [/tex].
    What do you find?
     
  6. Sep 30, 2008 #5

    statdad

    User Avatar
    Homework Helper

    Great!
    Yes, your final line

    [tex]
    P + 1175.98 = P(1.041)^{17}
    [/tex]

    is good. If you think about this, it is simply a linear equation with [tex] P [/tex] as the variable. All you need to do is rearrange terms and solve for [tex] P [/tex].
    What do you find?
     
  7. Sep 30, 2008 #6
    YES! Got it. Simple algebraic manipulation. Answer is $1,200.

    Thank you very much!
     
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