Question

After five years of earning interest at an annual rate of 4%, an investment has earned $1,200 in interest. Determine the amount of the initial investment. Show all work for full credit.

Answer 1

The initial investment was 1200 4percent a year is 48 dollars is 240 for 5 years add 1200 +240 =1440

Answer 2

$6000

Explanation:

Let recall

Given the formula I = P*r*t or principal x rate x time

Where I=Interest earned

P=principal, the amount deposited or borrowed

R=the annual interest rate

T=Time frame

Therefore $1200 = Px0.04x5

P = 1200/(0.2)

P = 12000/2 = $6000

The amount of the initial investment id $6000