Question

Miranda wants to give her 14-year-old daughter $20,000 when she turns 18. How much does she need to put in the bank now if the interest rate is 10 percent per year?

Answer 1

For simple interest, A = PRT + P, where A is the amount you get, P is the principle, R is the interest rate and T is the time. So, the mother needs to get 20000 after 4 year. That means A = 20000, T = 4. It is given that R, the interest rate, is 10%. Plug in the values to find P.