Exercise 10 Page 39

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. 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 $\text{accrued}$ and $\text{annual}$ interest, as well as the $\text{time of the investment}$ in years. We will substitute these values into the rewritten formula and then evaluate. It takes $2500$ dollars of investment to earn $500$ dollars of interest.