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In the following exercises, solve.

In 25years, a bond that paid 4.75%earned $2,375 interest.
What was the principal of the bond?

Short Answer

Expert verified

The principal of the bond was $2,000

Step by step solution

01

Step 1. Given Information

Interest, I=2,375

Rate, r=4.75%

Time, t=25 years

02

Step 2. Simple interest formula

Simple interest,I=Prt

Substitute the known values,

2,375=P(0.0475)(25)2,375=1.1875P

03

Step 3. Find P 

Solve the equation for P,

P=2,3751.1875=2,000

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