Question

Content attributionQUESTION 411 POINTFind the principal invested if $549 interest was earned in 8 years at an interest rate of 9%.Provide your answer below:

Answer 1

Solution:

The amount earned after a particular period of time at an interest rate is expressed as

$\begin{gathered} A=P(1+rt)\text{ ---- equation 1} \\ where \\ A\Rightarrow amount\text{ earned} \\ P\Rightarrow amount\text{ invested} \\ r\Rightarrow interest\text{ rate} \\ t\Rightarrow time \end{gathered}$

Also,

$\begin{gathered} A=P+I\text{ --- equation 2} \\ where \\ I\Rightarrow interest\text{ earned} \end{gathered}$

Given that $549 interest was earned in 8 years at an interest rate of 9%, this implies that

$\begin{gathered} I=549 \\ t=8 \\ r=9\%=0.09 \end{gathered}$

Substituting these values into equations 1 and 2, we have

$\begin{gathered} A=P(1+(0.09\times8)) \\ \Rightarrow A=1.72P\text{ ---- equation 3} \\ A=P+549\text{ -----equation 4} \end{gathered}$