Question

if you want to earn 2 nnual simple interest on an investment, how much should you pay for a note that will be worth $12,500 in 10 months? (round your answer to two decimal places.)

Answer 1

To earn 2% annual simple interest on an investment that will be worth $12,500 in 10 months, you should pay $833,333.33 for the note.

Step-by-step explanation:

To calculate the amount you should pay for a note that will be worth $12,500 in 10 months and earn 2% annual simple interest, we can use the formula:

Simple Interest = Principal × Rate × Time

Given that the simple interest is 2% and the time is 10 months (which is equivalent to 10/12 of a year), we can substitute the values into the formula:

2% = Principal × 0.02 × (10/12)

To find the Principal, we can rearrange the formula:

Principal = Simple Interest / (Rate × Time)

Substituting the values into the formula:

Principal = 12,500 / (0.02 × (10/12))

Simplifying the expression, we get:

Principal = 12,500 / 0.015

Principal = $833,333.33 (rounded to two decimal places).