Vanessa deposited money into a bank account that earned 1.25% simple interest each year. After 1/2 year, she had earned $5.00 in interest on the account.
If no other money was deposited into or withdrawn from the account, how much was her initial deposit?
800 or 400
the answer is 800
I = PRT
5 = P * 0.0125 * 0.5
Solve for P
To find out the initial deposit, we need to use the formula for simple interest:
Simple Interest = (Principal Amount) x (Interest Rate) x (Time)
Let's say the initial deposit is represented by "x" dollars.
Given:
Simple Interest = $5.00
Interest Rate = 1.25%
Time = 1/2 year
First, we need to convert the interest rate to a decimal by dividing it by 100:
1.25% ÷ 100 = 0.0125
Next, let's substitute the given values into the formula:
$5.00 = x * 0.0125 * (1/2)
We can simplify the equation:
$5.00 = 0.00625x
Now, solve for "x" by dividing both sides of the equation by 0.00625:
$5.00 ÷ 0.00625 = x
Calculating the division:
x ≈ $800.00
Therefore, Vanessa's initial deposit was approximately $800.00.