Bert is planning to open a savings account that earns 1.6% simple interest yearly. He wants to earn exactly $224 in interest after 2 years. How much money should he deposit?

Question

anonymous · Answer

plz help quickly! my bedtime is right around the corner

mathmale · Answer

Let's rely on the old standby simple interest formula:  I = P*r*t, where I is the interest earned in 1 year, r is the interest rate (expressed as a decimal fraction), and t is the number of years.

One way of looking at this is to calculate the simple interest earned after 1 year and to put that interest aside.  Then after another year the same interest will have been earned.  Adding together the 2 interest payments should result in $224.

Try solving I = $112 = P * (0.016) * 1.  That's the simple interest for 1 year.

Double that, and you'll have the simple interest after 2 years.


Other people might insist that the interest earned during the first year be added to the original principal, so that that P will be larger during the 2nd year than before.  This is called "compound interest."

anonymous · Answer

thx

anonymous · Answer

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