Question

How much principal amount does an investor need to have in order to gain $160 in simple interest in an account that has an interest rate of 7% per month over 4 months? Round your answer to the nearest cent.

Answer 1

The formula for simple interest rate is given by,

X = Prt

X = simple interest amount that we get after t time period which is given here as $160

Here P = principal amount invested which we need to calculate here.

r = simple interest rate which is given as 7% per month or 0.07

t = time period for which amount is kept which is given as 4 months so t = 4

Putting in the values we get,

160= P×r×t

Here r = 0.07

t = 4 and P we need to calculate.

160 = 0.07×P × 4

P = 40/0.07

P = $571.43

So the principal amount that we need to have to earn $160 of simple interest over 4 months at an interest rate of 7% is equal to $571.43

My sincere apologies for inconvenience, I misread the Question at first.