Answer:
The amount you need to invest in a year is $951.3
Step-by-step explanation:
Consider the provided information.
The future value can be calculated as:
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]
Where, A represents future value, P represents Principal value, r represents interest rate in decimal, n represents number of time interest is compounded and t represents time in years.
Now use the above formula to find the money needed to invest i.e P.
Substitute, n = 12 , t = 1, A = 1000 and r = 5% or 0.05 in the above formula.
[tex]1000=P(1+\frac{0.05}{12})^{12 \times 1}[/tex]
[tex]1000=P(1.00417)^{12}[/tex]
[tex]1000=P(1.0512)[/tex]
[tex]P=951.3[/tex]
Thus, the amount you need to invest in a year is $951.3
