Question

Rich deposited money into a bank account that earned 2.5% simple interest each year. After 2 years, he had earned $14.65 in interest on the account. If no other money was deposited into or withdrawn from the account, how much was his initial deposit?

Answer 1

we know that

The simple interest formula is equal to

`I=Prt`

where

P is the Principal amount of money to be invested

I is the amount of money in interest

r is the rate of interest

t is Number of Time Periods

in this problem we have

`t=2\ years\\ I=\$14.65\\r=0.025`

substitute in the formula above and solve for P

`14.65=P(0.025)(2)`

`P=14.65/[(0.025)(2)]`

`P=\$293`

therefore

the answer is

`\$293`