Question

Lauren deposited x dollars into a savings account that pays 2.75% annual simple interest. After one year, Lauren's account had earned $30.25 in interest. What was the amount of Lauren's original deposit?

Answer 1

The amount of Lauren's original deposit is $1100.

Explanation:

The formula of the simplest interest is I = P r t, where

• P is the original amount

• r is the interest rate in decimal

• t is the time

∵ Lauren deposited x dollars into a savings account that pays

2.75% annual simple interest.

∴ P = x dollars

∴ r = 2.75

→ Divide it by 100 to change it to decimal

∵ 2.75 ÷ 100 = 0.0275

∴ r = 0.0275

∵ After one year, Lauren's account had earned $30.25 in interest

∴ t = 1 year

∴ I = 30.25 dollars

→ Substitute them in the rule above

∵ 30.25 = x(0.0275)(1)

∴ 30.25 = 0.0275x

→ Divide both sides by 0.0275

∴ 1100 = x

∴ The amount of Lauren's original deposit is $1100.