Question

The amount of simple interest earned on an investment over a fixed amount of time is jointly proportional to the principle invested and the interest rate. A principle investment of $1500.00 with an interest rate of 5% earned $375.00 in simple interest. Find the amount 5 of simple interest earned if the principle is $2300.00 and the interest rate is 8%.

Answer 1

Answer:

$920

Step-by-step explanation:

Let $P$ be the principle, $I$ the simple interest and $R$ the rate. For the variation,

$I\propto PR$

$I= kPR$ where $k$ is the constant of proportionality.

$k= \frac{I}{PR}$

From the question, a principal of $1500 at 5% yields am interest of $375. Using these values in the expression for $k$ above,

$k=\frac{375}{1500\times5}=\frac{1}{20}$

Thus, the relation becomes

$I=\frac{1}{20}PR$

When $P=$ $2300 and $R=$ 8%,

$I= \frac{1}{20}\times2300\times8 =$ $920