After 6 years, an account that earns 4% simple interest has earned $480 in interest. How much was the initial deposit?
plug in your values into
I = PRT
480 = P(.04)(6)
solve for P
check your answer by finding the interest.
$2000
To determine the initial deposit, we need to use the formula for simple interest:
Interest = Principal * Rate * Time
In this case, we're given the following information:
Interest = $480
Rate = 4% = 0.04
Time = 6 years
Now, we can rearrange the formula to solve for the Principal:
Principal = Interest / (Rate * Time)
Substituting in the given values:
Principal = $480 / (0.04 * 6)
Calculating the expression inside the parentheses:
Principal = $480 / 0.24
Finally, let's calculate the principal:
Principal = $2,000
Therefore, the initial deposit was $2,000.