Question

tahmar 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 a rate of $r$. 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? $\\$ \square$

Explanation:

Step1: Identify given values

We know that \( I = 20 \) (interest), \( r = 5\%=0.05 \) (rate), and \( t = 5 \) (time in years). The formula to find \( P \) is \( P=\frac{I}{rt} \).

Step2: Substitute values into formula

Substitute \( I = 20 \), \( r = 0.05 \), and \( t = 5 \) into the formula \( P=\frac{I}{rt} \). So we have \( P=\frac{20}{0.05\times5} \).

Step3: Calculate denominator first

First, calculate \( 0.05\times5 = 0.25 \).

Step4: Calculate \( P \)

Now, divide 20 by 0.25: \( P=\frac{20}{0.25}=80 \).

Answer:

80