Question

Hannah earned $1536 in 8 years on an investment at a 4% annual simple interest rate. How much was Hannah’s investment? $4800 $3072 $768 $491. 52.

Answer 1

Simple interest calculates interest on initial amount only. The investment by Hannah was : Option A: $4800

How to calculate simple interest amount if rate of interest is R% annually?

Suppose that the initial amount of investment is P

And the rate of simple interest is R% annually,

And the time of investment is T years.

Then, the amount of simple interest is calculated as:

$I = \dfrac{P \times R \times T}{100}$

For the given case, let the initial investment Hannah made was of $P

Then, the time of investment is T = 8 years, R% = 4%, and given that Hannah earned interest I = $1536

Putting values in the above formula, we get;

$I = \dfrac{P \times R \times T}{100}\\\\1536 = \dfrac{P \times 8 \times 4}{100}\\\\P = \dfrac{153600}{32} = 4800$

Thus,

The investment by Hannah was : Option A: $4800

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