Vanessa deposited money into a bank account that earned 1.25% simple interest each year. After 12 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If no other money was deposited into or withdrawn from the account, how much was her initial deposit?
Interest = P*r*t, where P is principal, r is the rate as a decimal, and t is the number of years
so....
5 = P(.015)(12)
solve for P
A rather unrealistic question. You say that "no other money was deposited into or withdrawn from the account", so where does the annual interest go ?
To find Vanessa's initial deposit, we need to use the formula for simple interest:
Interest = Principal × Rate × Time
In this case, we know that Vanessa earned $5.00 in interest and the interest rate is 1.25%. We also know that the time period is 12 years. So we can rearrange the formula and solve for the principal:
Principal = Interest / (Rate × Time)
Let's substitute the given values into the formula:
Principal = $5.00 / (1.25% × 12 years)
First, we need to convert the percentage rate to decimal form. To do this, divide the rate by 100:
Principal = $5.00 / (0.0125 × 12 years)
Next, multiply the decimal rate by the number of years:
Principal = $5.00 / 0.15
Now, divide the interest amount by the decimal rate:
Principal = $33.33
Therefore, Vanessa's initial deposit was $33.33.