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?

Question

$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.