Question: The Board of Governors at the Federal Reserve Bank set the prime interest rate. These rates trickle down through the economy at various rates and affect consumer spending and saving habits. The economists at the Federal Reserve follow sample households in order to extrapolate information which they use in forecasting. For example, in one household they studied, the family made an investment for 1 year that earned $7.50 simple interest. If the principal had been $25 more and the interest rate 1% less, the interest would have been the same. Find the principal and the rate.