Question

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?

Answer 1

`$3,125`

Explanation:

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`