Question

After five years of earning interest at an annual rate of 4%, an investment has earned $1,200 in interest. Determine the amount of the initial investment. Show all work for full credit.

Answer 1

P=I÷rt
P initial investment ?
I interest earned 1200
R interest rate 0.04
T time 5 years

P=1,200÷(0.04×5)
P=6,000

Hope it helps

Answer 2

The amount of the initial investment is $ 6000.

Explanation:

Given: After five years of earning interest at an annual rate of 4%, an investment has earned $1,200 in interest.

We have to find the amount of the initial investment.

We know,

`\text{Simple interest}=p* r* t`

Where P is initial investment

r is rate of interest

t is time period.

Given : Simple interest = $ 1200

Rate = 4 % =0.04

Time = 5 years

Substitute, we get,

`1200=P* 0.04* 5`

Solve for P, we have,

Divide both side by 0.04 × 5 , we have,

`(1200)/(0.04* 5)=P`

Simplify, we get ,

P = $ 6000

Thus, The amount of the initial investment is $ 6000.