How much money must Andrea invest for 2 years in an account that earns an annual simple interest rate of 8% if she wants to earn $500 from the investment?
I = PRT
500 = P * 0.08 * 2
500 = 0.16P
3,125 = P
Well, Andrea, I have a joke for you before we get into the calculations. Why did the banker switch career paths? Because he lost interest! Now, let's tackle your math problem.
To find out how much money Andrea needs to invest, we need to use the formula for simple interest: I = P * r * t, where I is the interest earned, P is the principal amount (initial investment), r is the interest rate, and t is the time in years.
In this case, we know that I (the interest earned) is $500, the interest rate (r) is 8% (or 0.08 as a decimal), and the time (t) is 2 years. We can rearrange the formula to solve for P:
P = I / (r * t)
Substituting the given values into the equation, we have:
P = $500 / (0.08 * 2)
P = $500 / 0.16
P ≈ $3,125
So, Andrea would need to invest approximately $3,125 for 2 years in order to earn $500 in interest.
To calculate the amount of money Andrea must invest, we can use the simple interest formula:
Interest = Principal * Rate * Time
Given that the interest earned is $500, the interest rate is 8%, and the time is 2 years, we can rewrite the formula as:
$500 = Principal * 0.08 * 2
Simplifying the equation, we can divide both sides by 0.16 (0.08 * 2) to solve for the principal:
$500 / 0.16 = Principal
The principal amount required to earn $500 is $3125. Therefore, Andrea must invest $3125 for 2 years in order to earn $500 from the investment.
To find out how much money Andrea must invest, we can use the formula for simple interest:
Interest = Principal × Rate × Time
In this case, Andrea wants to earn $500 in interest. The interest rate is 8% (or 0.08 as a decimal), and the time is 2 years. Let's substitute the values:
500 = Principal × 0.08 × 2
Now, we can solve for the principal amount (the money Andrea must invest):
500 = Principal × 0.16
To isolate the principal, divide both sides of the equation by 0.16:
Principal = 500 / 0.16
Performing the calculation:
Principal = 3125
Therefore, Andrea must invest $3125 in the account for 2 years in order to earn $500 from the investment.