Question 1055055
simple interest is not compounded.
it is applied to the original amount only.


the formula for simple interest is i = p * r * n


i is the interest
p is the principal
i is the interest rate per time period
n is the number of time periods


the formula for future value would be.


f = p + i


f is the future value
p is the principal or present value
i is the interest.


when you combine the two formulas, you get:


f = p + p * r * n


you are given that f = 6000.
you are given that n = 15 years
you are given that i = 8% / 100 = .08 per year.


plug those values into the formula and you get:


6000 = p + p * .08 * 15


simplify to get 6000 = p + 1.2 * p


combine like terms to get 6000 = 2.2 * p


divide both sides of this equation by 2.2 to get p = 6000 / 2.2


solve for p to get p = 2727.27 rounded to the nearest cent.


to confirm, start with 2727.27.


use the formula of f = p + p * r * n


replace with what you know to get f = 2727.27 + 2727.27 * .08 * 15


solve for f to get f = 6000 within a small number of cents.