If K = 3000,n = 0.02,and d = 0.07,then investment of ________ will hold (K/N)constant.

Name: If K = 3000,n = 0.02,and d = 0.07,then investment of ________ will hold (K/N)constant.
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Question

Quizplus · Accepted Answer

We know that (K/N) should remain constant. Therefore,

K/N = 3000/0.02 = 150000

Let's assume the investment amount is x. Then,

x/(x+K) = d

0.07 = x/(x+3000)

0.07(x+3000) = x

0.07x + 210 = x

0.93x = 210

x = 210/0.93

x ≈ 225.80

Out of the given choices, the closest value to $225.80 is 270. So, C) 270 is the best choice.