You can get a savings bond with a 5% annual interest rate. How much money should you put in the savings bond to earn $500 in simple interest in 8 years?

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Answer 1 · 2017-08-15T08:24:09

$1250

We know I = $\frac{P N R}{100}$ $[PNR]/100$ where I = Total Interest, P = Principal Amount, N = No. of Years and R = Rate of Interest.

Here, R = 5, I = $500, N = 8 and P = ?

So, 500 = $\frac{P .8 .5}{100}$ $[P.8.5]/100$

$\Rightarrow P = \frac{500.100}{8.5} = 1250$ $rArr P = 500.100/8.5 = 1250$

Answer 2 · 2017-08-15T08:33:03

$$ 1250$ $$1250$

Using Simple Interest Formula

$I = \frac{PRT}{100}$ $"I" = "PRT"/100$

Where $I = $ 500$ $"I" = $ 500$

$\times \times P = ?$ $color(white)(xxxx) "P" = ?$

$\times \times R = 5 %$ $color(white)(xxxx) "R" = 5%$

$\times \times T = 8 y e a r s$ $color(white)(xxxx) "T" = 8years$

Making "P" the subject of formula

$\Rightarrow P = \frac{100I}{RT}$ $rArr "P" = "100I"/"RT"$

Imputing the values

$\Rightarrow P = \frac{100 \times 500}{5 \times 8}$ $rArr "P" = (100 xx 500)/(5 xx 8)$

$\Rightarrow P = \frac{50000}{40}$ $rArr "P" = 50000/40$

$\Rightarrow P = $ 1250$ $rArr "P" = $1250$