Question

Marvin started a new savings account with a simple interest rate of 1.25%. after 5 years the account had earned 1,155. of there were no other deposits or withdrawals, what was the original amount placed in the account?

Answer 1

To calculate the original amount deposited in a savings account that earned simple interest, the formula Interest = Principal × Rate × Time is used and rearranged to solve for Principal. With an interest of $1,155 earned at a rate of 1.25% over 5 years, the original deposit was found to be $18,480.

Step-by-step explanation:

The student is asking how to find the original amount deposited in a savings account that earned simple interest over 5 years. Given that the interest rate is 1.25% and the total interest earned is $1,155, we can use the simple interest formula: Interest = Principal × Rate × Time. To solve for the Principal (the original amount), we rearrange the formula: Principal = Interest / (Rate × Time).

Using the given values, we substitute them into the formula:

• Interest = $1,155
• Rate = 1.25% or 0.0125 in decimal form
• Time = 5 years

Principal = $1,155 / (0.0125 × 5)

Principal = $1,155 / 0.0625

Principal = $18,480

Therefore, the original amount Marvin placed in the account was $18,480.