Question

If $5000 is invested at 7% annual simple interest, how long does

it take to be worth $6750?
yr

Answer 1

It takes 5 years for to get to $6750

Explanation:

To find the time, we use the formula for calculation of amount,

A = P(1+rt)

where,

A = Final amount = $6750

P = Initial amount = $5000

r = interest rate = 7% = 0.07

t = time

now,

A = P(1+rt)

solving for t,

`1+rt = A/P\\rt = A/P - 1\\t=(A/P-1)/r\\t = (6750/5000-1)/0.07\\t=(1.35-1)/0.07\\t = 0.35/0.07\\t = 5`

Hence t = 5 or it takes 5 years