Question

If you would like to make $2283 in 9 years, how much would you have to deposit in an account that pays simple interest of 5%

Answer 1

To solve this question, we would use the formula of simple interest.

`\begin{gathered} S\mathrm{}I=\text{PRT} \\ s\mathrm{}i=\text{simple interest} \\ p=\text{ principal} \\ r=\text{rate} \\ t=\text{time} \end{gathered}`

So the given data are

`\begin{gathered} p=\text{?} \\ s\mathrm{}i=2283 \\ t=9 \\ r=5\text{ \%=0.05} \end{gathered}`

We would need to find the principal

`\begin{gathered} 2283=p*0.05*9 \\ 2283=0.45p \end{gathered}`

Divide both sides by the coefficient of p

`\begin{gathered} (2283)/(0.45)=(0.45p)/(0.45) \\ p=5073.33 \end{gathered}`

In order to make an interest of 2283 in 9 years, you would have to save $5073.33 now