Question

After 2.5 years your investment account has earned $450 in interest. If the interest rate is 7.5% what was the principle on your account?

Answer 1

Answer: $2400

Explanation:

Given

Interest earned is $450

The rate of interest is R=7.5%

Time period T=2.5 years

Simple Interest is given by

`S.I.=(P* R*T)/(100)\quad [\text{P=Principal}]`

Substitute values

`450=(P* 7.5*2.5)/(100)\\\\P=(450* 100)/(7.5* 2.5)=\$2400`