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If $5000 is invested at 8% annual simple interest, how long does it take to be worth $9000?

a. 5 years
b. 10 years
c. 15 years
d. 20 years

1 Answer

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Final answer:

To determine the time it will take for a $5,000 investment at 8% annual simple interest to grow to $9,000, the simple interest formula I = PRT is used. The calculation shows that it will take 10 years for the investment to reach $9,000.

Step-by-step explanation:

To calculate how long it will take for an investment of $5,000 at an annual simple interest rate of 8% to grow to $9,000, we use the formula for simple interest, which is I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year, and T is the time in years.

The total interest earned when the investment is worth $9,000 is $9,000 - $5,000 = $4,000.

Now we can set up the equation: $4,000 = $5,000 x 0.08 x T

Dividing both sides by $5,000 x 0.08 gives us T = $4,000 / ($5,000 x 0.08)

So, T = $4,000 / $400 = 10 years.

Therefore, it takes 10 years for the investment to be worth $9,000.

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