Ahmad places a sum of money in a savings account that pays simple interest at 3% per year. He does not withdraw any interest. After 5 years, he has earned $450 in interest. How much money did he deposit in the account at the start?
Need a hint?
Work out the interest for 5 years as a percentage of the deposit first.
Worked answer
- Interest for 5 years is 5 × 3% = 15% of the deposit.
- 15% of the deposit = $450.
- 1% of the deposit = $450 ÷ 15 = $30.
- Deposit = 100 × $30 = $3000.
Answer: $3000
The mistake this question tests
Habit
Calculation slip
Dividing $450 by 3% forgets the 5 years; the total interest must be 15% of the deposit, not 3%.
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