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?

1 Answer
Nov 1, 2016

Answer:

#$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#