Question

You can get a savings bond with a 5% annual interest rate. How much money should you put in the savings bond to earn $500 in simple interest in 8 years?

Answer 1

$1250

Explanation:

We know I = `[PNR]/100` where I = Total Interest, P = Principal Amount, N = No. of Years and R = Rate of Interest.

Here, R = 5, I = $500, N = 8 and P = ?

So, 500 = `[P.8.5]/100`

`rArr P = 500.100/8.5 = 1250`

Answer 2

`$1250`

Explanation:

Using Simple Interest Formula

`"I" = "PRT"/100`

Where `"I" = $ 500`

`color(white)(xxxx) "P" = ?`

`color(white)(xxxx) "R" = 5%`

`color(white)(xxxx) "T" = 8years`

Making "P" the subject of formula

`rArr "P" = "100I"/"RT"`

Imputing the values

`rArr "P" = (100 xx 500)/(5 xx 8)`

`rArr "P" = 50000/40`

`rArr "P" = $1250`