A bank deposit paying simple interest st the rate of 8%/year grew to $1200 in 10 months. Find the principal. (Round your answer to the nearest cent.)

Answer 1

The principal is $1125.00.

Since this uses a simple interest rate, the formula is A = P(1 + rt). Since we know that after 10 months at an interest rate of 8%/yr, the amount grew to $1200, we can subsitute these values into the formula so that

1200 = P(1 + (0.08)(10/12)) =

1200 /(16/15) = P

P = 1125.

Therefore, the principal is $1,125.00.