Question

Samson opened a bank account with 1.25% simple interest. The total amount of interest Samson will earn after 20 years is $812.50. How much did amazon deposit when he opened his bank account?

Answer 1

$3250

Explanation:

The formula for simple interest is:

`i=Prt`

Where

i is the simple interest earned

P is the principal (initial amount) invested

r is the rate of interest (in decimal)

t is the time in years

Given, 1.25% simple interest, in decimal, that is:

1.25/100 = 0.0125

r = 0.0125

and

i = 812.50

t = 20

Substituting, we find P:

`i=Prt\\812.50=P(0.0125)(20)\\812.50=P(0.25)\\P=(812.50)/(0.25)\\P=3250`

The principal he invested was $3250