LET General Education Mathematics: Simple Interest Problem
Test your mathematical skills with this General Education practice question for the Licensure Examination for Professional Teachers (LET).
Practice Question
How much should a man deposit in a bank at 8% interest if he wants to gain ₱1,600 in a year?
- ₱16,000
- ₱15,000
- ₱18,000
- ₱20,000
Correct Answer: A. ₱16,000
Solution and Explanation
This problem involves simple interest. Simple interest is calculated based on the original amount of money deposited or borrowed, called the principal.
Use the simple interest formula:
I = P × R × T
- I = Interest
- P = Principal or original deposit
- R = Annual interest rate in decimal form
- T = Time in years
Since the question asks for the principal, rearrange the formula:
P = I ÷ (R × T)
Given:
- Interest = ₱1,600
- Rate = 8% = 0.08
- Time = 1 year
Substitute the values:
P = 1,600 ÷ (0.08 × 1)
P = 1,600 ÷ 0.08
P = ₱16,000
Therefore, the man should deposit ₱16,000 to earn ₱1,600 in simple interest after one year at an annual interest rate of 8%.
Why Is the Answer ₱16,000?
Eight percent of ₱16,000 is ₱1,280? No. Let's verify the computation carefully: ₱16,000 multiplied by 0.08 equals ₱1,280.
Therefore, the calculated principal of ₱16,000 does not produce the required ₱1,600 interest. The correct calculation is:
P = ₱1,600 ÷ 0.08 = ₱20,000
Thus, the correct answer is actually Option D. ₱20,000.
Board Exam Tip
When the problem asks for the principal, divide the given interest by the product of the interest rate and time. Always convert the percentage into decimal form before calculating.
Quick Check: 8% of ₱20,000 is ₱1,600. This confirms the correct answer.
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