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How long would it take for $75,000.00 to become $100,000.00 in an account that pays 2.35% simple interest?

a) 2.35 years
b) 6.27 years
c) 8.51 years
d) 16.04 years

User Fargonaut
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1 Answer

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Final answer:

It will take approximately 14.19 years for $75,000 to grow to $100,000 at a simple interest rate of 2.35%, using the formula T = I / (P * R). The given multiple choice options do not include the correct answer.

Step-by-step explanation:

Calculation of Time to Reach a Certain Amount with Simple Interest

To determine how long it will take for $75,000 to grow to $100,000 at a simple interest rate of 2.35%, we need to use the formula for calculating simple interest. The formula is I = PRT, where I is the interest, P is the principal amount (initial amount), R is the annual interest rate in decimal form, and T is the time in years. We need to rearrange the formula to solve for T, which gives us T = I / (P * R).

First, we calculate the total interest needed to reach the target amount:
Interest (I) = Final Amount - Principal AmountInterest = $100,000 - $75,000 = $25,000

Next, we plug the values into the rearranged formula and solve for T:

T = I / (P * R)T = $25,000 / ($75,000 * 0.0235)

By doing the calculations, we find that:

T = $25,000 / $1,762.50 = 14.19

Therefore, it will take approximately 14.19 years for $75,000 to become $100,000 in an account that pays 2.35% simple interest. This means that none of the provided options (a), (b), (c), or (d) are correct.

User User Rebo
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