An investment earning 16% simple interest has a maturity value of $9440.00 after eight months. What was the initial amount invested?
A) $8530.12
B) $10,446.93
C) $7228.92
D) $8853.33
E) $7780.22

Question

Quizplus · Accepted Answer

The maturity value of an investment is calculated as the sum of the principal (the initial amount invested) and the interest earned. Given a 16% annual simple interest rate, the interest for 8 months (or 8/12 of a year) can be calculated, and then the principal can be determined by subtracting this interest from the maturity value. The correct calculation leads to an initial investment of approximately $8530.12.

An Investment Earning 16% Simple Interest Has a Maturity Value