Question

Simple Interest Practice P5(A)-2135-7-MATH / Simple Interest 2. What was the original amount deposited on an account with a total amount of $80 in the account after 8 years with a 2% interest rate?

Answer 1

The formula to use for solving simple interest rate problems is:

$i=\text{Prt}$

Where

i is interest accumulated

P is the initial, or principal, amount

r is the rate of interest [in decimal]

t is the time

Given,

Total amount in account is 80 [principal plus interest]

rate is 2%

time is 8 years

Let's write:

$\begin{gathered} 80=P+\text{Prt} \\ 80=P(1+rt) \\ 80=P(1+(0.02)(8)) \\ 80=P(1+0.16) \\ 80=P(1.16) \\ P=\frac{80}{1.16} \\ P=68.9655 \end{gathered}$

The amount in the account was around $68.97