Question

How much will have to deposit into an account that pays 5.25% simple interest today, in order to earn $345.45 interest in seven years? Use the simple interest formula below

Answer 1

To earn $345.45 simple interest in 7 years, you have to invest $940.

Step-by-step explanation:

Step 1:

Given details are Simple Interest Rate (R) = 5.25%, Simple Interest (SI) = $345.45, Time (T) = 7 years

Step 2:

Use the above details to find principal using the formula for Simple Interest (SI) = PRT/100

⇒ 345.45 = (P × 5.25 × 7)/100

⇒ 34545 = 36.75 P

⇒ P = $940