Question

How long must $1,000 be invested at an annual interest rate of 3% to earn $300 in simple interest?

Answer 1

In this question, we have to find how long will it take by investing $1000, with interest rate of 3% and to get $300 as interest.

And for that we have to use the simple interest formula, with P as the principal, r is the rate and t is the time. And the formula is

`I = Prt`

Substituting the values of P , r and t , we will get

`300 = 1000*0.03*t`

`300=30t`

Now we need to isolate t, and for that, we divide both sides by 30, that is

`t=10 years`