Question

Mike's grandmother opened a savings account in Mike's name and deposited some money into the account. The account pays an annual simple interest rate of 11%. After 11 years, the interest earned on the account was $4,840. How much money did Mike's grandmother deposit in the account?

Answer 1

In this question we have to use the formula of simple interest, which is

I = P r t

Where I is the interest earned, P is the amount invested, r is the rate of interest and t is the time duration .

In the given question, I = $4840 , r =11% or 0.11, t=11, P is unknown .

Substituting the values in the formula, we will get

`4840=0.11*11*P`

`4840=1.21 P`

P=4000

So she invested $4000.