Question

3. What amount of money is necessary to be invested at 5% simple interest to yield $320 in interest after 4 years?

Answer 1

`Amount = \$1920`

Explanation:

Given

`Interest =\$320`

`Rate = 5\%`

`Years = 4`

Required

Determine the invested amount

First, we need to determine the Principal

This is calculated as:

`Interest = Principal * Rate * Time`

Solve for Principal

`Principal = (Interest)/(Rate * Time)`

`Principal = (\$320)/(0.05 * 4)`

`Principal = (\$320)/(0.2)`

`Principal = \$1600`

Add the principal to the interest

`Amount = Principal + Interest`

`Amount = \$1600 + \$320`

`Amount = \$1920`