Question

A bank deposit paying simple interest at the rate of 8%/year grew to a sum of $1300 in 6 months. Find the principal. (Round your answer to the nearest cent.)

Answer 1

$1,250

Explanation:

The rate is 8%

= 8/100

= 0.08

Time is 6 months

= 1/2 year

Therefore the principal can be calculated as follows

Principal × (1+0.08(1/2) = 1300

Principal × 1+ 0.04 = 1300

Principal × 1.04= 1300

Principal= 1300/1.04

Principal = $1,250

Hence the principal is $1,250