Question

Antonio wants to invest $7600 in a saving account. Determine the interest rate (simple interest) required for Antonio’s investment to double in value in 12 years.

Answer 1

Interest rate required for Antonio’s investment to double in value in 12 years is 8.3 % per annum

Solution:

Given that,

Antonio wants to invest $7600 in a saving account

Antonio’s investment to double in value in 12 years

To find: Rate of interest

The total amount using simple interest is given as:

`A = p(1+(r)/(100)t)`

Where,

p is the principal

r is the rate of interest

t is the number of years

From given,

p = 7600

t = 12 years

r = ?

Antonio’s investment to double

Therefore,

A = 2(7600) = 15200

Substituting the values we get,

`15200 = 7600(1 + (r)/(100) * 12)\\\\(15200)/(7600) = 1 + 0.12r\\\\2 = 1 + 0.12r\\\\0.12r = 2 - 1\\\\0.12r = 1\\\\r = 8.333 \%`

`r \approx 8.3 \%`

Thus interest rate required for Antonio’s investment to double in value in 12 years is 8.3 % per annum