Question

how much principal must be deposited into a 3 year simple interest account that pays 2.43% interest to earn $200 in interest?

Answer 1

The principal should be of $2,743.5.

Explanation:

Simple interest formula:

I = P*r*t

In which

I is the interest earned

P is the principal

r is the interest rate, as decimal

t is the time, in years.

In this question:

Earn 200 in interest, so I = 200.

Principal P we want to find

Interest rate of 2.43%, so r = 0.0243

3 years, so t = 3.

Then:

I = P*r*t

200 = P*0.0243*3

P = (200)/(3*0.0243)

P = 2743.5

The principal should be of $2,743.5.