Question

You want to save ₹1,20,000 to buy your first self-driving magic carpet. You deposit ₹80,000 in a bank at an interest rate of 5%, percent per annum. How many years do you have to wait before you can buy your magic carpet?

Answer 1

10 years.

Explanation:

We have been given that you want to save ₹1,20,000 to buy your first self-driving magic carpet. You deposit ₹80,000 in a bank at an interest rate of 5%, percent per annum.

We will use simple interest formula to solve our given problem.

`A=P(1+rt)`, where,

A = Final amount after t years,

P = Principal amount,

r = Annual interest rate in decimal form,

t = Time in years.

`5\%=(5)/(100)=0.05`

`120,000=80,000(1+0.05t)`

`(120,000)/(80,000)=(80,000(1+0.05t))/(80,000)`

`1.5=1+0.05t`

`1.5-1=1-1+0.05t`

`0.5=0.05t`

`0.05t=0.5`

`(0.05t)/(0.05)=(0.5)/(0.05)`

`t=10`

Therefore, you have to wait 10 years before you can buy your magic carpet.

Answer 2

10 years

Explanation:

Principal invested P = 80000

Interest rate r = 5%

Let us assume simple interest.

Then interest amount should be 40000 to have total of 120000 to buy the magical carpet.

For simple interest the formula is PTR/100 where T = no of years

i.e. 40000 = 80000(5)T/100

Simplify to get

T = 10 years.

Hence after 10 years, we will get a total amount of Rs.120000/- to buy the magical carpet.