Question

You put $600 in an account with a simple interest rate of 2.5%. How long does it take for the account to earn $45?

Answer 1

`3\ years`

Explanation:

we know that

The simple interest formula is equal to

`A=P(1+rt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

`t=?\ years\\ P=\$600\\ A=\$600+\$45=\$645\\r=0.025`

substitute in the formula above and solve for t

`645=600(1+0.025t)`

`t=[(645/600)-1]/0.025=3\ years`