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7 March, 07:08

Owen's grandmother put some money into his savings account on the day he was born. Today, Owen turns 18 years old, and he's discovered that he has earned $225 in simple interest on his grandmother's money. If the yearly interest rate was 5%, how much money did his grandmother deposit at the time of his birth?

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  1. 7 March, 07:20
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    Step-by-step explanation:

    The formula for simple interest is prt = I, where p is the initial investment (our unknown in this case), r is the interest rate in decimal form, t is the time in years, and I is the interest earned. That is NOT the same as the amount of money in the account t years later.

    For us,

    p = ?,

    r =.05,

    t = 18, and

    I = 225.

    Filling in:

    p (.05) (18) = 225 and

    .9p = 225 so

    p = 250
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