Question

QuestionTim has a savings account with the bank. The bank pays him 5% per year. He has $6,400 and wonderswhen it will reach $6,800. When will his savings reach $6,800? If necessary, round your answer to thenearest whole number.Considering interest is calculated yearly, it will take Tim approximatelyyear(s).

Answer 1

This is a simple interest problem, and we will use the simple interest formula to solve it.

`\begin{gathered} I=(PRT)/(100) \\ I=\text{Amount}-\text{Principle} \end{gathered}`

Amount = $6,800

Principle= $6,400

Therefore, Interest I=$6,800-$6,400

=$400

R (Rate) = 5%

T (Time) = unknown.

Now, substitute all these parameters into the simple interest formula:

`\begin{gathered} I=(PRT)/(100) \\ 400=(6,400*5* T)/(100) \\ \text{Cross multiply} \end{gathered}`

`\begin{gathered} 400*100=32000T \\ \end{gathered}`
`\begin{gathered} 40000=32000T \\ (40000)/(32000)=T \\ 1.25=T \\ 1year\cong T(to\text{ the nearest whole number)} \end{gathered}`

It will take Tim approximately 1 year.