To calculate the initial investment amount, Kevin made in the savings bond, we can use the simple interest formula:
\[ I = P \times r \times t \]
where:
- \( I \) is the total interest earned ($80),
- \( P \) is the principal amount (the initial investment we are trying to find),
- \( r \) is the annual interest rate (2% or 0.02 as a decimal),
- \( t \) is the time the money is invested in years (2 years).
We rearrange the formula to solve for \( P \):
\[ P = \frac{I}{r \times t} \]
Now, we substitute \( I \), \( r \), and \( t \) with known values:
\[ P = \frac{80}{0.02 \times 2} \]
\[ P = \frac{80}{0.04} \]
\[ P = 2000 \]
Kevin invested $2000 in a savings bond.
Kevin invested in a savings bond for two years and was paid simple interest at an annual rate of 2%. The total interest that he earned was $80. How much did he invest? If necessary refer to the list of financial formulas.
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