Question

Kelly earns $178.50 in interest on an account that earns simple interest at a rate of 4%. If she kept the money in the account for 5 years, how much was the principle amount?

Answer 1

$892.50

Explanation:

The amount of interest earned is given by ...

I = Prt

Filling in the given values, we have ...

$178.50 = P·0.04·5

Dividing by 0.20 gives ...

$178.50/0.20 = P = $892.50

The principal amount in Kelly's account is $892.50.