What sum of money will produce $2,860 interest in 3 years 3 months at 2.5% p.a. simple interest? Ops: A. $36,500 B. $35,600 C. $32,500 D. $35,200
Question
What sum of money will produce 36,500 B. 32,500 D. $35,200
Solution
To solve this problem, we need to use the formula for simple interest which is I = PRT, where I is the interest, P is the principal amount (the sum of money), R is the rate of interest, and T is the time.
In this case, we know the interest (I) is $2,860, the rate of interest (R) is 2.5% per annum (or 0.025 as a decimal), and the time (T) is 3 years and 3 months (or 3.25 years in decimal form).
We need to find the principal amount (P), so we rearrange the formula to solve for P:
P = I / (RT)
Substituting the given values:
P = 2860 / (0.025 * 3.25)
P = 2860 / 0.08125
P = $35,200
So, the sum of money that will produce 35,200. Therefore, the correct answer is D. $35,200.
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