Answer:
You would need an initial investment of $71,178.02
Step-by-step explanation:
Great question, it is always good to ask away and get rid of any doubts that you may be having.
Based on the question we can see that this is a compounding interest problem, therefore we can use the Exponential Growth Formula in order to solve this. The formula is the following.
[tex]F = a*(1+r)^{t}[/tex]
Where:
- F is the final price/payment
- a is the initial deposit
- r is the interest rate in decimal format
- t is the time
Now that we have the formula we can plug in the values given to us in the question and solve for the initial amount (a).
[tex]100,000 = a*(1+0.12)^{3}[/tex]
[tex]100,000 = a*1.404928[/tex] .... divide both sides by 1.404928
[tex]71,178.02 = a[/tex]
We can see from the calculations above you would need an initial investment of $71,178.02
I hope this answered your question. If you have any more questions feel free to ask away at Brainly.
