Question

Bert is planning to open a savings account that earns 1.6% simple interest yearly. He wants to earn exactly $160 in interest after two years. How much money should he deposit?

Answer 1

Answer: he should deposit $5000

Step-by-step explanation:

The formula for determining simple interest is expressed as

I = PRT/100

Where

I represents interest paid on the amount of money deposited.

P represents the principal or amount of money deposited.

R represents interest rate on the deposit.

T represents the duration of the deposit in years.

From the information given,

I = $160

R = 1.6%

T = 2 years

Therefore,

160 = (P × 1.6 × 2)/100

160 = 0.032P

P = 160/0.032

P = $5000