Question

In 10 years, a bank account with a 5.25% annual interest rate earned $18,375 as simple interest. What was the principal amount?

Answer 1

Answer:

The principal amont was $35,000

Step-by-step explanation:

This is a simple interest problem.

The simple interest formula is given by:

$E = P*I*t$

In which E are the earnings, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time.

In this problem, we have that:

$E = 18375, t = 10, I = 0.0525$

We want to find P. So

$E = P*I*t$

$18375 = P*0.0525*10$

$0.525P = 18375$

$P = \frac{18375}{0.525}$

$P = 35000$

The principal amont was $35,000