Question

Algebraically manipulating the formula FV = P +Prt, find the simple interest rate it would take to double (2 times) the initial deposit of $7,000 for 8 years.10%11%12.5%9.5%None of these choices are correct.

Answer 1

The Solution.

The given formula is

`\begin{gathered} FV=P+\text{Prt} \\ \text{Where FV=2P=2(7000)=\$14000} \\ P=\text{ \$7000} \\ t=8\text{ years} \\ r=\text{?} \end{gathered}`

Substituting the above values into the given equation, we get

`\begin{gathered} 14000=7000+7000* r*8 \\ 14000=7000+56000r \\ \text{Collecting the like terms, we get} \\ 14000-7000=56000r \\ 7000=56000r \\ \text{Dividing both sides by 56000, we get} \\ r=(7000)/(56000)=(1)/(8)=0.125\text{ \%} \end{gathered}`

Clearly, we can say that none of the given options is correct.

So, the correct answer is the last option (option E)