Question

Tahmar knows the formula for simple interest is I = Prt, where I represents the simple interest on an amount of money, P, for t years at r rate. She transforms the equation to isolate P : P = . Using this formula, what is the amount of money, P, that will generate $20 at a 5% interest rate over 5 years?

$

Answer 1

The formula to find the simple interest earned is
I = Prt
Solve for p by dividing both sides by rt to get
P=I/rt
P=?
I=20
R=0.05
T=5years
So
P=20÷(0.05×5)
P=80

Hope it helps!