Question

Violeta wants to buy a car that costs $11,600.00. She deposits $10,000.00 into a savings account that earns 4% simple interest. How long must Violeta leave the money in the savings account to be able to buy the car?

Answer 1

At 4% interest, it would take a lot longer than four months for Violeta to accumulate $1,600 in interest.

Use the formula for simple interest: i = p r t, where p is the initial amount, r is the interest rate as a decimal fraction, and t represents the number of years.

Here, $1600 = $10000*0.04*t, where t is unknown. Find t.

$1600
-------------------- = t in years = 4 years
($10000*0.04)