Question

1.How long will it take for $75,000.00 to become $100,000.00 in a account that pays 2.35 simple interest?2.how much more interest is earned in 1 year if we compare $50,000.00 at a 3.15% rate, when one account is simple interest and the other compounds weekly?

Answer 1

Interest = Principal x rate x time divided by 100

Mathematically,

`I\text{ = }\frac{P\text{ }\ast\text{ R}\ast\text{ T}}{100}`

The principal which is the money invested is $75, 000.00

The balance in the account after 2.35 interest rate is $100, 000.00

but we dont know how long the money had been saved

We need to find time t

Therefore,

p = $75,000.00

I = $100, 000.00

r = interest rate = 2.35%

Let make Time t the subject of the formula

From the above equation

I * 100= P x R x T

T = I x 100/ Px R

T = 100, 000 x 100 / 75,000 x 2.35

T= 10,000,000 / 176250

T = 56. 74 months

to convert to year

12 months ----- 1year

therefore, 56.74 months = 56.74/12

4.74years

he saved the money for approximately 5 years