An investment earning simple interest at a rate of 1.10% per annum for a term of 5 years earned $82.50 in interest. What was the principal?
5 * .011 * p = 82.5
To find the principal, we need to use the formula for calculating simple interest:
Simple Interest = Principal × Rate × Time
In this case, we are given the simple interest earned ($82.50), the interest rate (1.10% per annum), and the time period (5 years). We need to find the principal.
Let's plug in the given values into the formula and solve for the principal:
$82.50 = Principal × 1.10% × 5
First, convert the interest rate from a percentage to a decimal by dividing it by 100:
1.10% ÷ 100 = 0.011
Substitute the decimal value back into the formula:
$82.50 = Principal × 0.011 × 5
Simplify the equation:
$82.50 = 0.055 × Principal
Now, isolate the Principal by dividing both sides of the equation by 0.055:
$82.50 ÷ 0.055 = Principal
Calculating this gives us:
$1500 = Principal
Therefore, the principal amount is $1500.