Question

John invested a sum of money which earned $750 simple interest at the rate of 6% over 2 years. How much did John invest?

A) $88.80
B) $6250
C) $3125
D) $2175

Answer 1

John invested $6,250 to earn $750 in simple interest over 2 years at a rate of 6%.

Step-by-step explanation:

The student has asked how much money John invested if he earned $750 simple interest for 2 years at a rate of 6%. To find the principal (the initial investment), we can use the simple interest formula:

I = PRT,

where:
I is the interest earned,
P is the principal (the amount of money invested),
R is the interest rate (in decimal form), and
T is the time in years.

Rewriting the formula to solve for P, we get:

P = I / (RT).

Plugging in the given values:

P = $750 / (0.06 × 2).

Therefore:

P = $750 / 0.12 = $6250.

So John invested $6250.