Question

Suppose you invest $5,000 at 4% annual interest. How many years would it take for your investment to be worth $10,000? Round your answer to the nearest hundredth (2 places after the decimal).

Answer 1

Given:

Principal Amount , P = $ 5,000

Interest Rate, r = 0.04 = 4%

Final Value of the Investment , A = $ 10,000

Required: time it will take for the investment to be worth $10, 000, t = ?

Solution:

Assume Simple Interest.

`\begin{gathered} A=P(1+rt) \\ 10000=5000(1+0.04t) \\ (10000)/(5000)=(5000(1+0.04t))/(5000) \\ 2=1+0.04t \\ 2-1=0.04t \\ 1=0.04t \\ t=(1)/(0.04) \\ t=25 \end{gathered}`

Answer: t = 25 years