Question

How much principal would you have to deposit to earn $700 simple interest in 2 years at a rate of 2%?

Answer 1

$673.077

Explanation:

Answer 2

P = $673.077

General Formulas and Concepts:

Pre-Algebra

Order of Operations: BPEMDAS

1. Brackets
2. Parenthesis
3. Exponents
4. Multiplication
5. Division
6. Addition
7. Subtraction

• Left to Right

Equality Properties

Algebra I

Simple Interest Rate Formula: A = P(1 + rt)

• A is final amount
• P is principle amount
• r is rate
• t is time (in years)

Explanation:

Step 1: Define

A = 700

r = 2% = 0.02

t = 2

Step 2: Solve for P

1. Substitute [SIRF]: 700 = P[1 + 0.02(2)]
2. [Brackets] Multiply: 700 = P[1 + 0.04]
3. [Brackets] Add: 700 = P[1.04]
4. Isolate P: 673.077 = P
5. Rewrite: P = 673.077