Question

How long does it take a principal of $25,000 at a simple interest rate of 5% to become 30,000? Show all work

Answer 1

It takes 4 years for a principal of $25,000 at a simple interest rate of 5% to become 30,000

Solution:

Given that:

principal = $ 25000

rate of interest = 5 %

Total amount = $ 30000

Number of years = ?

Formula used:

Total amount = principal + Simple interest

30000 = 25000 + Simple interest

Simple interest = 30000 - 25000

Simple Interest = $ 5000

The simple interest is given as:

`S.I = (pnr)/(100)`

Where, "p" is the principal

"n" is the number of years

"r" is the rate of interest

Substituting the values in formula, we get

`5000 = (25000 * n * 5)/(100)\\\\5000 = 250 * n * 5\\\\n = (5000)/(250 * 5)\\\\n = 4`

Thus it takes 4 years for a principal of $25,000 at a simple interest rate of 5% to become 30,000