Question

John deposited $800 dollars in a bank that pays 5% interest per year. Find how many years it would take for his money to grow $950? Round your answer to the nearest decimal place.

Answer 1

It will take 3 years and 9 months or simply 3.75 years

Explanation:

For his money to grow to $950, this means he had earned an interest of the value $950 - $800 = $150

Now, to calculate the number of years it took to earn this interest, we make use of the simple interest formula

mathematically,

I = PRT/100

since we are looking for T, we can rewrite the equation to be?;

100I = PRT

T = 100I/PR

where I is the interest which is $150

R is the rate charged on the deposit and that is 5% per annum

P is the amount deposited initially which is 800

while I is the interest which is $150

Now plugging these values;

T = (100 * 150)/(5 * 800)

T = 15000/4,000 = 3.75 years or simply 3 + (0.75 * 12) = 3 years 9 months