How much money must be invested at 6.3%/a simple interest to earn $250 in interest each month
.063x = 250
solve for x
I think it's probably an annual rate
.063/12 x = 250
To determine the amount of money that must be invested at a simple interest rate of 6.3% in order to earn $250 in interest per month, we can use the formula for simple interest:
Interest = Principal x Rate x Time
Since we are given the interest per month ($250) and the interest rate per annum (6.3%), we need to convert the annual rate to a monthly rate before plugging the values into the formula.
Monthly interest rate = Annual interest rate / 12
= 6.3% / 12
= 0.525%
Now, let's plug in the values into the formula:
$250 = Principal x 0.525% x 1
Simplifying the equation, we have:
$250 = Principal x 0.00525
To isolate the Principal, we divide both sides of the equation by 0.00525:
Principal = $250 / 0.00525
= $47,619.05
Therefore, approximately $47,619.05 must be invested at a simple interest rate of 6.3% to earn $250 in interest each month.
To calculate the amount of money that needs to be invested at a certain interest rate to earn a specific amount of interest, you can use the formula for simple interest:
Interest = Principal × Rate × Time
In this case, you want to earn $250 in interest each month, the rate is 6.3%, and the time is 1 year because the rate is given per year.
Let's denote the principal amount we want to find as P.
$250 = P × 0.063 × 1
Now, let's solve for P:
P = $250 / (0.063 × 1)
P = $3,968.25
Therefore, to earn $250 in interest each month at a 6.3% annual simple interest rate, you would need to invest approximately $3,968.25.