Question

How much should you invest at 5% simple interest in order to earn $100 interest in 12 months?​

Answer 1

You should invest $2000 at 5% simple interest in order to earn $100 interest in 12 months.

Explanation:

Using the formula

`I = Prt`

where

I = Interest earned

P = The principal (let say in $)

r = The Interest Rate

t = time

Given that

• I = $100

• r = 5%

• t = 12 month = 1 year

• P = The principal amount needed to invest (let say in $)

Thus,

`I = Prt`

100 = P × 5% × 1

100 = P × 5/100 × 1

100 × 100 = P × 5

10000 = P × 5

P = 10000/5

= 2000 (let say in $)

Thus, you should invest $2000 at 5% simple interest in order to earn $100 interest in 12 months.