Question

Situation:Holly wants to save money for anemergency. Holly invests $1,000 in anaccount that pays an interest rate of6.25%

Answer 1

Given data:

Amount of money invested, P = $1000

Interest rate, r = 0.0625

Total money in the account, A = 5500

Now, to find the years use simple interest rate formula that is

`A=P(1+rt)`

Therefore, t will become

`t\text{ = (A/P}-1\text{)/r}`

Putting the values we get,

`t=((5500)/(1000)-1)\text{ / 0.0625}`
`\begin{gathered} t=(5.5-1)\text{ / 0.0625} \\ t=(4.5)/(0.0625) \\ t=72 \end{gathered}`

Thus, it will take 72 years for the account to reach 5500.