We have a simple interest case. In this kind of situation, we have to use the next formula for simple interest:
Where:
• I is the earned interest. In this case, we have I = $200.
,
• P is the Principal amount (that is, the amount the man borrowed in this case). In this case, we have P = $5,000.
,
• R is the interest rate. In this case, we have I = 16% = 16/100.
,
• T is time transcurred to get the earned interest. This is the unknown value we are about to find.
Therefore, we have:
Then we have:
Now, we need to divide both sides of the equation by the product 5000(0.16) to solve for T as follows: