Determine the principal that will earn $294 in 5 years at 6% per annum simple interest
Question
Determine the principal that will earn $294 in 5 years at 6% per annum simple interest
Solution
To determine the principal that will earn $294 in 5 years at 6% per annum simple interest, you can use the formula for simple interest:
I = PRT
where: I is the interest, P is the principal, R is the rate of interest, and T is the time.
In this case, you know that I = $294, R = 6% or 0.06 (as a decimal), and T = 5 years. You want to find P.
Rearrange the formula to solve for P:
P = I / (RT)
Substitute the known values into the formula:
P = 294 / (0.06 * 5)
Calculate the result:
P = 294 / 0.3
P = $980
So, the principal that will earn 980.
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