Question

Suppose you just deposited $500 into a bank account that has earned 5% interest on the amount you initially

invested. If the new balance is $1,760, what was your initial investment?

Answer 1

$1200

Explanation:

Let the initial amount that you invested be $ x.

We are told that the new balance after investing $500 is $1760.

Thus, the balance you had before the deposit $500 us;

$1760 - $500 = $1260

So, when the amount invested was $x, the balance was $1260.

Since this money earned 5% interest on the amount you initially

Thus;

$1260 = initial deposit + (5% of inital deposit)

Thus;

x + (5% * x) = 1260

x + (0.05x) = 1260

1.05x = 1260

x = 1260/1.05

x = $1200