Question

What amount do you need to invest to obtain $20,000 at 6 percent simple interest per year, after ten years?

Answer 1

This is a question which requires you to use the simple interest formula, that being I = PRT. Therefore, you get 20000 = P x 6% x 10, which means the amount you need to invest is 33333.3 rounded off to 1 decimal place.

Answer 2

Answer:

$12,500

Explanation:

Given information:

Amount = $20,000

Rate of interest = 6% = 0.06

Time = 10 years

Let x be the amount invested or principal amount.

Interest = Principal × Rate of interest × Time

Interest = x × 0.06 × 10

Interest = 0.6x

Amount = Principal + Interest

$A=x+0.6x$

$20000=1.6x$

Divide both sides by 1.6.

$\dfrac{20000}{1.6}=x$

$12500=x$

Therefore, the principal amount is $12500.