Question

Gene paid a deposit on a leased car. The deposit earns 2.8 percent simple annual interest. At the end of the year, the interest that is earned is $22.40. What was the amount of the original deposit?
$0.63
$80.00
$62.72
$800.00

Answer 1

To find the amount of the original deposit, we can use the formula for simple interest:

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

where:
- \(I\) is the interest earned,
- \(P\) is the principal amount (original deposit),
- \(r\) is the annual interest rate (as a decimal), and
- \(t\) is the time in years.

In this case:
- \(I = 22.40\)
- \(r = 2.8\% = 0.028\)
- \(t = 1\) year

Now we can plug the values into the formula and solve for \(P\):

\[
22.40 = P \times 0.028 \times 1
\]

\[
22.40 = P \times 0.028
\]

To isolate \(P\), we can divide both sides by \(0.028\):

\[
P = \frac{22.40}{0.028}
\]

Calculating that gives:

\[
P = 800
\]

So, the amount of the original deposit is **$800.00**.