Question

Timothy has a savings account that he started five years ago to begin saving for college. The

savings account has an interest rate of 3% and has earned $225 in interest since he began the
account. How much money did Timothy start the account with when he originally opened the
savings account?
A. $1500.00
B. $33.75
C. $7500.00
D. $3375.00
of $18

Answer 1

• I=PRT/100
• P=100I/RT
• P=100(225)/5(3)
• P=22500/15
• P=$1500

Answer 2

A. $1500.00

Explanation:

Assuming this is a simple interest savings account.

Simple interest formula

I = Prt

where:

• I = total interest
• P = principal amount
• r = interest rate (in decimal form)
• t = time (in years)

Given:

• I = $225
• r = 3% = 0.03
• t = 5 years

Substitute the given values into the formula and solve for P:

⇒ I = Prt

⇒ 225 = P(0.03 ×5)

⇒ 225 = P(0.15)

⇒ P = 225 ÷ 0.15

⇒ P = 1500

Therefore, Timothy started the account with $1500.00.