You want to put some money in a simple interest account it pays 8% interest annually for 2 years you would like to earn 500 dollars in interest

You deposit some money into a bank account paying 8% simple interest per year. You received $500 in interest after 2 years. How much the deposit (principal) was?

Result

The principal was $3125.

Explanation

Find principal by using the formula I=P⋅i⋅t, where I is interest, P is total principal, i is rate of interest per year, and t is total time in years.

In this example I = $500, i = 8% and t = 2 years, so

IPPP=P⋅i⋅t=Ii⋅t=5000.08⋅2=3125