What principal will earn interest of $18.20 at 3.25% in 8 months?  
Question 2 Answer

a.
$840.00

b.
$840.59

c.
$845.00

d.
$840.95

To find the principal amount that will earn an interest of $18.20 at a rate of 3.25% over 8 months, we can use the simple interest formula:

\[
\text{Interest} = P \times r \times t
\]

Where:
- $ P $ is the principal amount (the amount to be determined).
- $ r $ is the annual interest rate (in decimal form).
- $ t $ is the time in years.

First, convert the interest rate from a percentage to a decimal:

\[
r = \frac{3.25}{100} = 0.0325
\]

Next, convert the time from months to years:

\[
t = \frac{8}{12} = \frac{2}{3} \text{ years}
\]

Now, plug the values into the formula and solve for $ P $:

\[
18.20 = P \times 0.0325 \times \frac{2}{3}
\]

Simplifying the equation:

\[
18.20 = P \times 0.02167
\]

Now, solve for $ P $:

\[
P = \frac{18.20}{0.02167} \approx 840.59
\]

So, the principal amount is approximately **$840.59**.

The correct answer is **b. $840.59**.

Would you like more details or have any other questions? Here are five related questions you might find interesting:

1. How is the simple interest formula derived?
2. What is the difference between simple interest and compound interest?
3. How would the principal change if the interest rate were different?
4. What would be the effect of a different time period on the principal?
5. How can you calculate interest for more complex scenarios, like varying interest rates?

**Tip:** Always ensure to convert time to the same units as the interest rate when using the simple interest formula.

Learn how to calculate the principal amount using the simple interest formula for a problem involving $18.20 interest at 3.25% over 8 months. Get the step-by-step solution and understand key mathematical concepts. Suitable for high school students.

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