You want to put some money in a simple interest account, it pays 8% interest annually for 2 years. You would like to earn $500 in interest How much money do you need to put in?

Question

8410 views around the world

You can reuse this answer
Creative Commons License

Answer 1 · 2016-11-01T18:31:25

$$ 3, 125$ $$3,125$

The formula for simple interest is $S I = \frac{P R T}{100}$ $SI = (PRT)/100$
We know all the values except the amount to be invested, $P$ $P$

Re-arrange the formula and substitute the known values:

$P = \frac{100 \times S I}{R T} = \frac{100 \times 500}{8 \times 2}$ $P = (100xxSI)/(RT) = (100xx500)/(8xx2)$

$P = $ 3125$ $P = $3125$

Check:

$S I = \frac{3125 \times 8 \times 2}{100}$ $SI = (3125xx8xx2)/100$

= $$ 500$ $$500$