Over 5 years, a bank account earned $2,400 of simple interest at a rate of 5%. How much had been deposited in the account?
A$8,600
B$12,000
C$9,600
D$9,000
Answer & Solution
Correct answer: C. $9,600
1. Use the simple interest formula I = Prt with I = 2,400 dollars, r = 0.05, and t = 5 years.
2. Substitute: 2,400 = P x 0.05 x 5.
3. Multiply the knowns: 2,400 = 0.25P.
4. Divide both sides by 0.25: P = 2,400 / 0.25 = 9,600.
5. So the principal deposited was $9,600.
6. $12,000 comes from using only one year of interest (2,400 / 0.05 divided by nothing but a slip), and $9,000 is a rounding guess.
7. Check: 9,600 x 0.05 x 5 = 2,400 dollars, which matches the interest earned.
_Source: OpenStax Prealgebra (CC BY 4.0), Ch 6 "Percents", section 6.4 Solve Simple Interest Applications_
Related questions
An investor puts $4,500 into an account paying 1.9% annual interest and leaves it for 8 moA brother lends his sister $5,000. Three years later she repays the $5,000 plus $900 in inA saver puts $36,000 in a bank account paying 6.5% interest. How much simple interest doesHow much simple interest is earned on $800 invested for 4 years at an interest rate of 5%?A music store buys a guitar at a wholesale price of $1,200 and marks the price up 50%. WhaAn air conditioner with an original price of $400 sells on sale for $340. What is the discA barbecue grill with an original price of $395 is discounted 65%. What is the sale price?A salesperson received $1,140 commission for selling a car priced at $28,500. What rate of