Question

Tahmar knows the formula for simple interest is I = Prt, where I represents the simple interest on an amount of money, P, for t years at r rate. She transforms the equation to isolate P : P = P : P equals StartFraction I Over r t EndFraction.. Using this formula, what is the amount of money, P, that will generate $20 at a 5% interest rate over 5 years?

Answer 1

80dollars

Step-by-step explanation

p=i/rl

p=20/(0.05)(5)

p=20/.25

P=80

Answer 2

$80

Explanation:

Using the suggested formula, we can find the principal needed to generate the $20 interest at a 5% (in decimal form 0.05) interest rate over a period of 5 years:

`P=(I)/(r*t) \\P=(20)/(0.05*5) \\P=(20)/(0.25)\\P=80`

Therefore, she needs an $80 principal.