Question

.If Rashard wants to earn $300 interest in 2 years from an account that earns an annual simple

interest rate of 8%, how much must he invest initially?

Answer 1

$ 1875

Explanation:

Richard invests some amount P. He want the money he invested to gain an interest of $300.

A = P(1 + n×i)

A = P + 300

i = 0.08

n = 2

P + 300 = P(1 + 2×0.08)

P + 300 = P(1.16)

300 = 1.16P - P

300 = 0.16P

300/0.16 = 0.16P/0.16

P =300/0.16

P = $1875

Richard should invest $1875 if he wants an interest of $300 in 2 years.