If the average interest earned per year on an investment is $200, and this interest is 5% of the total amount invested, what is the total amount of the investment?
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To determine the total amount of the investment given that the average annual interest earned is $200, and this represents 5% of the total investment, follow these steps:
1. **Define the Variables**: Let \( P \) be the total amount of the investment.
2. **Set Up the Equation**: We know that 5% of \( P \) equals $200. In mathematical terms, this can be written as:
\[
0.05 \times P = 200
\]
3. **Solve for \( P \)**: To find \( P \), divide both sides of the equation by 0.05:
\[
P = \frac{200}{0.05}
\]
4. **Calculate the Total Investment**:
\[
P = \frac{200}{0.05} = 4000
\]
Therefore, the total amount of the investment is $4,000. This result confirms that if the interest earned ($200) is 5% of the total amount, then the total investment must be $4,000.
To determine the total amount of the investment given that the average annual interest earned is $200, and this represents 5% of the total investment, follow these steps:
1. **Define the Variables**: Let \( P \) be the total amount of the investment.
2. **Set Up the Equation**: We know that 5% of \( P \) equals $200. In mathematical terms, this can be written as:
\[
0.05 \times P = 200
\]
3. **Solve for \( P \)**: To find \( P \), divide both sides of the equation by 0.05:
\[
P = \frac{200}{0.05}
\]
4. **Calculate the Total Investment**:
\[
P = \frac{200}{0.05} = 4000
\]
Therefore, the total amount of the investment is $4,000. This result confirms that if the interest earned ($200) is 5% of the total amount, then the total investment must be $4,000.