Question

John deposited $800 in a bank that pays 5% interest per year. How many years it will take for his money to grow to $950? Round answer to one decimal place.

Answer 1

It will take 3.2 years for his money to grow to $950.

Explanation:

This is a simple interest problem.

The simple interest formula is given by:

`E = P*I*t`

In which E are the earnings, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time.

After t years, the total amount of money is:

`T = E + P`.

John deposited $800 in a bank

This means that
`P = 800`

5% interest per year.

This means that
`I = 0.05`

How many years it will take for his money to grow to $950?

We have to find t for which T = 950. So

`T = E + P`

`950 = E + 800`

`E = 150`

And

`E = P*I*t`

`150 = 950*0.05*t`

`t = (150)/(950*0.05)`

`t = 3.2`

It will take 3.2 years for his money to grow to $950.