Math CentralQuandaries & Queries


Question from Lee, a student:

If a bank pays 3% simple interest anually on savings, and you did not take any money out of your account, how much money would you have deposited to earn $45 in interest

Hi Lee.

The amount of simple interest you earn annually equals the interest rate times the principal (the initial deposit).

So let P = the principal. Then $45 = 3% x P.

Three percent is 3/100 = 0.03, so this means

45 = 0.03P

Now we "solve for P" by dividing both sides of the equation by 0.03:

45 / 0.03 = 0.03P / 0.03

$1500 = P. So the initial deposit was $1500.

Problem solved.

Stephen La Rocque.

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