Question

How much should you invest now at 7 1/4% simple annual interest in order to earn $190 interest in 4 months?

Answer 1

so principal amount is $7862.07

Explanation:

Given data

rate = 7*1/4 % = 29/4 %

interest = $190

time = 4 months = 4/12 year

to find out

principal

solution

we know the simple interest formula i.e.

interest = ( principal × rate × time ) /100 ..................1

now put all value rate time and interest in equation 1 we get interest here

interest = ( principal × rate × time ) /100

190 = ( principal × 29/4 × 4/12 ) /100

principal = 190 × 12 ×100 / 29

principal = 7862.068966

so principal amount is $7862.07