Question

tabinar knows the formula for simple interest is $i = prt$, where $i$ represents the simple interest on an amount of money, $p$, for $t$ years at $r$ rate. she transforms the equation to isolate $p$: $p = \frac{i}{rt}$. using this formula, what is the amount of money, $p$, that will generate $20 at a 5% interest rate over 5 years? $\boldsymbol{\square}$

Explanation:

Step1: Identify given values

$I = \$20$, $r = 5\% = 0.05$, $t = 5$ years

Step2: Substitute into the formula

$P = \frac{I}{rt} = \frac{20}{0.05 \times 5}$

Step3: Calculate denominator first

$0.05 \times 5 = 0.25$

Step4: Compute final value of P

$P = \frac{20}{0.25} = 80$

Answer:

$\$80$