How much money should Carol invest in a savings account earning 5% simple interest in order to have 2500 in 2 years?

Question

Calculate how much Carol should invest in a savings account earning 5% simple interest in order to have 2500 in 2 years

Answer 1

Richard,

"simple interest" means there is no interest charged on the interest earned. Invest $100 with 5% interest and you earn $5 each year: 5 the first year 10 the next then 15.....

x = the amount initially invested

=> x + 2(0.05x) = 2500

<=> x + 0.1x = 2500

<=> 1.1x = 2500

x = $2272.73

I hope this helps