Question

Natalie opened a bank account that earns 2.5% simple interest. If her account earned $180 over the next ten years, how much was Natalie’s initial deposit when she opened the account?

Answer 1

Answer: $720.

Explanation:

The formula to find the simple interest is given by :-

`I=Prt`, where P is the principal amount , r is the rate of interest in decimal and t is the time in years.

Given : Rate of interest : r= 0.025

Simple interest : I= $180

Time : t=10

Let P be the Natalie’s initial deposit when she opened the account, then we have:-

`180=P(0.025)(10)\\\\\Rightarrow\ P(0.25)=180\\\\\Rightarrow\ P=(180)/(0.25)=(18000)/(25)=720`

Hence, the Natalie’s initial deposit when she opened the account was $720.