Question

At a simple interest rate of 13% per year, determine how long will it take $7,500 to increase to 5 times as much. Compare the time it will take to double if the rate is 20% per year simple interest.

Answer 1

t=30.77 years or 30 years and 9 months, t=5 years

Step-by-step explanation:

The simple interest formula for calculation is given below:

F= P (1 + it)

F=future value=5*7,500=$37,500 or 2*7,500=$15,000

P=amount invested today=$7,500

i=interest rate=13% or 20%

t=time taken

5 time increase at 13%

$37,500=$7,500(1+13%*t)

5=1+13%t

4=13%t

t=30.77 years or 30 years and 9 months

Double increase at 20%

$15,000=$7,500(1+20%*t)

2=1+20%t

1=20%t

t=5 years