AnnieDe6v3mikawh
Answered

Tahmar knows the formula for simple interest is I = Prt, where I represents the simple interest on an amount of money, P, for t years at r rate. She transforms the equation to isolate P : P = . Using this formula, what is the amount of money, P, that will generate $20 at a 5% interest rate over 5 years?

Verified Answer :

The answer is $80 for this question.

JeanaShupp

Answer: $80

Step-by-step explanation:

Given: The simple interest generated after 5 years = $20

The rate of interest =5%

In decimal, the rate of interest (r)= 0.05

Let P be the principal amount, which Tahmar invested.

The given formula to find simple interest is

\(I=Prt\\\\\Rightarrow P=\frac{I}{rt}\\\\\text{On substituting the given values, we have}\\\\\Rightarrow P=\frac{20}{0.05\times5}\\\\\Rightarrow P=80\)

Hence, the principal amount which he invested = $80

Related Questions