Samson opened a bank account with 1.25% simple interest. The total amount of interest Samson will earn after 20 years is $812.50.How much did Samson deposit when he opened the account?

Accepted Solution

The equation for simple interest is:
Future interest = Principal*(interest rate*number of years). Remember to write the interest rate of 1.25% as 0.0125 (rather than directly as 1.25)
812.50 = x(0.0125*20)
812.5 = x(0.25)
x = $3250
This means that Samson deposited $3250 when he opened the account.