Aprincipal amount is invested at a simple interest rate of 8%o per annum. After 2 years, the interest eamed is $320. Find the principal amount.
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. $2000.
I = P × r × t
(I) is the interest earned = 320
(P) is the principal amount,
(r) is the annual interest rate (as a decimal) = 8% = 0.08
(t) is the time in years = 2
⇒ 320 = P × 0.08 × 2
⇒ 320 = P × 0.16
⇒ P = 320 / 0.16
⇒ P = 2000