Question

After five years of earning interest at an annual rate of 4%, an interview has earned $1,200 interest.Determine the amount of the initial investment.

Answer 1

Is it simple or compound interest? With simple interest, the person above would be correct. However, if it were compound interest, things get more complex.

`1.04^(5)`*n=1200+n

`1.04^(5)`n - n =1200
1200/
`1.04^(5)`n - n = 5538.81 to the nearest decimal place

Answer 2

"an interview has earned $1200 in interest?" Perhaps you meant, "A certain individual..."

i = p* r* t
$1200
$1200 = p*(0.04)(5) => p = ----------- = $6000 (answer)
0.20