Question

Simon opened a certificate of deposit with the money from his bonus check. The bank offered 4.5% interest for 3 years of deposit. Simon calculated that he would earn $87.75 in the time. How much did Simon deposit to open the account?

Answer 1

$650

Explanation:

To find the amount that Simon deposited to get $87.75 in time, we need to use the formula:

`I=Prt`

Let's break down our variables first.

P = ?

r = 4.5% or 0.045

t = 3

I = $87.75

Now let's plug our values into the formula.

`I=Prt`

`87.75=P(0.045*3)`

`87.75=P(0.135)`

To find P we need to divide both sides with 0.135.

`(87.75)/(0.135)=(P(0.135))/(0.135)`

`P=650`

This means the Simon deposited $650 to open the account.