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 answer is $80 for this question.

Answer 2

Answer: $80

Explanation:

Given: The simple interest generated after 5 years = $20

The rate of interest =5%

In decimal, the rate of interest (r)= 0.05

Let P be the principal amount, which Tahmar invested.

The given formula to find simple interest is

`I=Prt\\\\\Rightarrow P=(I)/(rt)\\\\\text{On substituting the given values, we have}\\\\\Rightarrow P=(20)/(0.05*5)\\\\\Rightarrow P=80`

Hence, the principal amount which he invested = $80