How much principal must be deposited to earn $700 simple interest in 2.5 years at a rate of 14%?

Question

1601 views around the world

You can reuse this answer
Creative Commons License

Answer 1 · 2017-07-07T15:33:31

#$2000#

The formula to find simple interest is #Prt=i#
#P=# principle; #r= #rate; #t= #time in years; #i=# interest

#P*0.14*2.5=700#
#P*0.35=700#
#P=$2000#

Answer 2 · 2017-07-07T15:45:41

#P = $2000#

Simple interest can be calculated from the formula

#SI = (color(blue)(P)RT)/100#

In this case are looking for the Principal #color(blue)(P)#, but are given the values for Interest, Rate and Time.

Changing the subject of the formula gives:

#color(blue)(P) = (100xxSI)/(RT)#

Substitute the values:

#color(blue)(P) = (100xx700)/(14 xx 2.5)#

#P = $2000#