Question

John invested in a savings bond for 4 years and was paid simple interest at an annual rate of 4%. The total interest that he earned was $48. How much did he invest?

Answer 1

the principal or invested amount is $41.38

The computation of the invest amount is given below:

As we know that

Principal = Amount ÷ (1 + rate × time)

= $48 ÷ (1 + 0.04 × 4)

= $48 ÷ 1.16

= $41.38

Hence, the principal or invested amount is $41.38

Basically we have applied the above formula so that the same would be calculated