Question

You deposit $5,000 in an account that earns 5% simple interest. How long will it be before the total amount is $6,000?

Answer 1

`t=4\ years`

Explanation:

we know that

The simple interest formula is equal to

`A=P(1+rt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

`t=?\ years\\ P=\$5,000\\ A=\$6,000\\r=5\%=5/100=0.05`

substitute in the formula above

`6,000=5,000(1+0.05t)`

solve for t

Simplify

Divide by 5,000 both sides

`1.2=1+0.05t`

subtract 1 both sides

`0.05t=1.2-1`

`0.05t=0.2`

divide by 0.05 both sides

`t=4\ years`