Question

After 6 years, an account that earns 4% simple interest has earned %480 in interest. How much was the initial deposit?

Answer 1

$2000

Explanation:

The formula for simple interest is:

`i=Prt`

Where

i is the interest earned

P is the initial deposit

r is the rate of interest (in decimal)

t is the time

Now, in the problem, it is given:

i = 480

r = 4% = 4/100 = 0.04

t = 6

Now, we substitute and find the value of P (initial deposit):

`i=Prt\\480=P(0.04)(6)\\480=P(0.24)\\P=(480)/(0.24)\\P=2000`

Hence, the initial deposit was $2000