28
QuizMultiple Choice

Compound Interest — Unit test

Question 28 • Academy- Financial Algebra A 27

Iris has an investment worth $8,813. She made her only deposit in it seven years ago. Given that the investment yields 3.7% simple interest annually, how big was the initial deposit?

Answer
A
$1,806
B
$2,282
C
$4,095
D
$7,000

Explanation

With simple interest, the final value is A = P(1 + rt). Here, 1 + (0.037 × 7) = 1.259, so the initial deposit was $8,813 ÷ 1.259 = $7,000. The correct choice is $7,000.

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