Question

You open a savings account that earns 0.85% annual simple interest. After 3 years, you earn $306 on your initial deposit. If you didn’t make any additional deposits or withdrawals, what is your initial deposit?

Answer 1

The initial deposit, calculated using the simple interest formula I = P × r × t, is $12,000.

Step-by-step explanation:

To calculate the initial deposit for a savings account that earns simple interest, you can use the formula for simple interest, which is I = P × r × t, where I is the interest earned, P is the principal amount (initial deposit), r is the annual interest rate, and t is the time in years. In this case, you were given that the interest earned was $306, the annual interest rate is 0.85%, and the time is 3 years.

To find the initial deposit, P, rearrange the formula to solve for P: P = I / (r × t). Substituting the given values, we get: P = $306 / (0.0085 × 3), which simplifies to P = $306 / 0.0255. When you calculate this, you find that the initial deposit P is $12,000.

Answer 2

The initial deposit was $120

Step-by-step explanation:

102 is .85% of 120.

We know that the money was in the account for 3 years, so we multiply 102*3 which gets us $306.