Question

You invest $5000 at 8% simple interest paid annually how long will it take for investment to reach $8000

Answer 1

8 years

Explanation:

You need to use the future value for simple interest equation here:

future value = principal x (1 + interest rate x time)

Given:

FV = 8000

p = 5000

r = 0.08

t = ?

`FV = p (1+rt)\\8000=5000(1+0.08t)\\1.6=1+0.08t\\0.08t=0.6\\t=7.5`

It will take 8 years to reach $8000 (you need to round the 7.5 up because the interest is only calculated once annually - your answer must be a whole number).

Answer 2

Explanation:

5000x8%=400

You will get $400 annually.

8000-5000(the money that you have originally)=3000

Therefore, 400x7.5=3000

It will take u 7.5years to reach the total of 8000.