Final answer:
To earn $5 in simple interest at an 8% annual rate over a period of 1 year, you would need to deposit $62.50. This is calculated using the formula for simple interest rearranged to solve for the principal.
Step-by-step explanation:
When calculating how much you need to deposit in an account that pays simple interest to reach a certain amount over a given period, you need to use the formula for simple interest: Interest (I) = Principal (P) × Rate (R) × Time (T).
Let's assume you want to deposit an amount that will earn $5 in simple interest at an 8% annual rate. You need to rearrange the formula to solve for the principal, which is the initial amount deposited. The formula becomes: P = I / (R × T). Let's say the time period is 1 year, then the calculation would be: P = $5 / (0.08 × 1) = $62.50. Therefore, you would need to deposit $62.50 to earn $5 in interest at an 8% simple interest rate over one year.