Question 1121607: During a certain period, a manufacturing company invested some money in a bank at 40% simple interest per annum. Given that after 6 months, the total value of the investment was $840,00 calculate the amount invested.
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! with simple interest, the formula used is:
i = p * r * n
i is the interest
p is the principal
r is the interest rate per time period
n is the number of time periods
also:
f = p + i
f is the future value
p is the principal
i is the interest
in your problem.
r = 40% per year = .4 per year = .4/12 per month
n = 6 months
formula for i says i = p * r * n which becomes i = p * .4 / 12 * 6 which becomes i = p * .2.
f = p + i becomes f = p + p * .2.
since f = 840, this formula becomes 840 = p + p * .2 which becomes 840 = p * (1 + .2) which becomes 840 = p * 1.2.
divide both sides by 1.2 to get 840 / 1.2 = p = 700.
the principal amount is 700.
using p = 700 and r = .4/12 and n = 6, you get i = 700 * .4/12 * 6 = 140
f = p + i becomes f = 700 + 140 = 840.
numbers check out.
solution is that the amount invested is 700.
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