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 $300 from the investment?
I = Prt, so
P(.08)(2) = 300
To solve this problem, we can use the formula for simple interest:
Simple Interest = Principal × Rate × Time
In this case, the principal is the amount of money Andrea needs to invest, the rate is 8% (or 0.08 as a decimal), and the time is 2 years. The interest earned is $300.
We need to rearrange the formula to solve for the principal amount:
Principal = Interest / (Rate × Time)
Substituting in the given values:
Principal = $300 / (0.08 × 2)
Principal = $300 / 0.16
Principal = $1875
Therefore, Andrea must invest $1875 for 2 years in order to earn $300 from the investment.