Question

Alonzo invested in a savings bond for 4 years and was paid simple interest at an annual rate of 5%.The total interest that he earned was 1,000. How much did he invest?

Answer 1

To solve this type of question, we can use the formula for simple interest:

$A=P(1+rt),$

where A is the final amount, P is the initial amount, r is the annual interest rate, and t is the time in years.

Substituting A= 1000, t=4, and r=0.05, we get:

$1000=P(1+0.05\times4).$

Solving the above equation for P we get:

$\begin{gathered} \frac{1000}{(1+0.2)}=P, \\ P=\frac{1000}{1.2}, \\ P=833.3\bar{3}. \end{gathered}$

Answer: He invested

$833.\bar{3}.$