Use the simple interest formula I=Prt, where P is the principal amount, r the interest rate, and t the number of years.
$2500
Practice makes perfect
Let's recall the simple interest formula. In the formula I represents the interest, P is the principal amount invested, r is the interest rate, and t the number of years of the investment.
I=Prt
Before we find how much money we need to deposit in the account, first we are going to solve the above formula for P.
In the exercise we are given the accrued and annual interest, as well as the time of the investment in years.
I= 500 r= 4 %= 0.04 and t= 5
We will substitute these values into the rewritten formula and then evaluate.
