Luke inherited some money and invested it at at 6% simple interest. at the end of the year, the total amount of his original principle and the interest was $18,020. How much did luke originally invest?
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Simple interest means that your principal (original amount) grows at a rate of 6% every year. So if I invest an initial amount P, then at the end of the year I will have 6% more, that is
Total = P * (1+0.06)
In this case, I know my Total = 18,020. Plugging into the form:
18020 = P(1.06)
P = 18020/1.061
P = 17000
Just to check, 6% of 17000 is 1020. 17000 + 1020 = 18020, as stated.
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