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?

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Answer 1 · 2016-11-01T18:31:25

$$3,125$

The formula for simple interest is $SI = (PRT)/100$
We know all the values except the amount to be invested, $P$

Re-arrange the formula and substitute the known values:

$P = (100xxSI)/(RT) = (100xx500)/(8xx2)$

$P = $3125$

Check:

$SI = (3125xx8xx2)/100$

= $$500$