Question

A capital is invested, at simple interest, at the rate of 4% per month. How long, at least, should it be applied, so that it is possible to redeem triple the amount applied? * 1 point a) 15 months b) 30 months c) 35 months d) 50 months.

Answer 1

The amount of time needed for this capital to triple would be 50 months, the letter "d" being correct. We arrive at this result using simple interest.

Simple interest

Simple interest is a type of financial calculation that is used to calculate the amount of interest on borrowed or invested capital for a given period of time.

In order to find the amount of time required for the principal to be equal to three times the redemption, we have to note that the amount will be equal to three times the principal, using this information in the formula. Calculating, we have:

M = C * (1 + i * t)

3C = C * (1 + 0.04t)

3 = 1 + 0.04t

0.04t = 3 - 1

0.04t = 2

t = 2/0.04

t = 50