Question

You want to put some money in a simple interest account. It pays 6% interest annually for 2 years. You would like to earn $750 in interest. How much money do you need to put in?

Answer 1

Alex wants to borrow $1,000. The local bank says "10% Interest". So to borrow the $1,000 for 1 year will cost:$1,000 × 10% = $100In this case the "Interest" is $100, and the "Interest Rate" is 10% (but people often say "10% Interest" without saying "Rate")Of course, Alex will have to pay back the original $1,000 after one year, so this is what happens:Alex Borrows $1,000, but has to pay back $1,100This is the idea of Interest ... paying for the use of the money

Answer 2

Answer: $6250

Explanation:

Given; Interest = $750 Rate = 6 Time = 2 principal =?

let principal = x

Simple Interest = P × R × T / 100

where p = principal R = rate

T = time

We now go ahead and substitute

Simple Interest = P × R × T / 100

$750 = X × 6 × 2 /100

$750 = 12x / 100

cross multiply

12x = $750 × 100

12x = $75000

Divide bothside by 12

12x/12 = $75000/ 12

x = $6250

Therefore you will need to put $6250