Question

Javier's parents set an amount of money aside when he was born. They earned 4.5% simple interest on that money each year. When Javier was 15, the account had a total of $1012.50 interest paid on it. How much did Javier's parents set aside when he was born

Answer 1

Answer:

Javier's parents set aside $1500 when he was born

Step-by-step explanation:

This is a simple interest problem.

The simple interest formula is given by:

$E = P*I*t$

In which E is the interest earned, 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 question, we have that:

$E = 1012.50, t = 15, I = 0.045$

We have to find P. So

$E = P*I*t$

$1012.50 = P*15*0.045$

$P = \frac{1012.50}{15*0.045}$

$P = 1500$

Javier's parents set aside $1500 when he was born