Question

Jason opened an account at Maths Watch Bank. Maths Watch Bank's interest rate was 4%. After one year, the bank paid him interest. The total amount in his account was then £1976. Work out the amount with which Jason opened his account.

A. £1900
B. £1850
C. £1904
D. £1920

Answer 1

Jason originally deposited £1900 in his account. Using the simple interest formula and given data, the calculation indicates £1900 as the principal amount before 4% interest was added to reach a total of £1976 after one year.

Step-by-step explanation:

You want to figure out the amount Jason originally deposited in his account at Maths Watch Bank. Given the account's interest rate was 4% and the total amount after one year is £1976, we can use the formula for simple interest to calculate the principal (the original amount). The formula for simple interest is:

total amount = principal + (principal × interest rate × time)

Let's set up our equation using the information:

• Total amount after one year (A): £1976
• Annual interest rate (r): 4% or 0.04 as a decimal
• Time (t): 1 year

To find the principal (P), we rearrange the formula:

principal = (total amount) / (1 + (interest rate × time))

Substituting the given values we get:

principal = £1976 / (1 + (0.04 × 1))

principal = £1976 / 1.04

principal = £1900

Therefore, Jason must have originally deposited £1900.