How much principal would you have to deposit to earn $700 simple interest in 1½  years at a rate of 2%?

To find the principal that would earn $700 in simple interest over 1½ years at an interest rate of 2%, we can use the formula for simple interest:

\[
I = P \times r \times t
\]

Where:
- $ I $ is the interest earned (\$700),
- $ P $ is the principal (the amount we need to find),
- $ r $ is the annual interest rate (2%, or 0.02 as a decimal),
- $ t $ is the time in years (1½ years, or 1.5 years).

Rearranging the formula to solve for $ P $:

\[
P = \frac{I}{r \times t}
\]

Substituting the values:

\[
P = \frac{700}{0.02 \times 1.5}
\]

\[
P = \frac{700}{0.03}
\]

\[
P = 23,333.\overline{3}
\]

So, the principal amount required is \$23,333.33.

Would you like more details or have any other questions?

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Here are 5 related questions for further exploration:

1. How would the required principal change if the interest rate was 3% instead of 2%?
2. What would be the interest earned after 2 years with the same principal and interest rate?
3. How much interest would you earn in 1 year with a principal of \$10,000 at a 5% interest rate?
4. How long would it take to earn \$1,000 interest with a principal of \$5,000 at 4% interest rate?
5. What is the difference between simple interest and compound interest?

**Tip:** Simple interest is calculated only on the initial principal, whereas compound interest is calculated on the principal plus any interest already earned.

Learn how to calculate the principal amount required to earn $700 in simple interest over 1½ years at a 2% interest rate. This problem involves using the simple interest formula and is suitable for students in Grades 7-9.

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