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If no other money was deposited into or withdrawn from the account, how much was his initial deposit?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

Hello there.

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If no other money was deposited into or withdrawn from the account, how much was his initial deposit?

$293

Answer 2

The simple interest formula allows us to calculate I, which is the interest earned or charged on a loan. According to this formula, the amount of interest is given by I = Prt. We calculate as follows:

14.65 = P (.025)(2)
P = $293