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Ronisha invests $5000 in an account that earns 2.3% annual simple interest. After 3 years, Ronisha invests the interest earned in a second account. This account earns 3.2% annual interest. Ronisha leaves the money in this account until she has earned $55.20 in interest.

Ronisha does not deposit or withdraw any money from the accounts.

How long does Ronisha invest money into the second account?

User Shoheikawano
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2 Answers

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27 votes

Answer:

Ronisha invests the money in the second account for 5 years.

how much 1

Money invested = $5,000

Annual simple interest = 2.3% = 2.3/100 = 0.023

Years = 3 years

5,000 x 0.023 x 3 = 345

account 2

Interest Earned = $55.20

The amount deposited in the account = $345

Annual interest = 3.2% = 3.2/100 = 0.032

55.20/(345)(0.032) = 345 x 0.032 = 11.04

55.20/11.04 x 100

55.20 x 100 = 5520

11.04 x 100 = 1140

5520/1104 = 5

User MindFresher
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11 votes
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Answer:Very complicated problem, but thank goodness I have too much time and am a nerd. Basically model 1st account as so. Fv=pv(1+I)^NFv future value Pv present valueI interest N number yearsSo first equation is interest earned after 3 yearsY=5000(1+0.023)^3Y=5353 (rounded up)So we know that the interest earned is 5353-5000 which is 353. Now Ronisha (clearly the name of a future investment genius) invests these 353$ in a new account. Now remember we’re not solving for FV we’re cause we’re given that: 55.2$ However this is the interest earned not the future value. So if interest earned is fv - pv and we know pv Fv - 353 = 55.2Fv = 408.2$ So now we reuse the formula 408.2 = 353(1+0.032)^x Now just solve for x:First divide both sides by 353 1.156 = 1.032^x Remember the log rule that states x=b^y is same as y=logb(x)So using the same logic:X= log1.032(1.156) Use some kind of calculator for that where you can adjust log base. But you basically get:X= 4.602So Ronisha has to basically invest 5 years or 4.6 years which is 4 years and 7 months. Omg nevermind, wait it’s simple interest….Sorry here’s the simple solution. My bad, but I worked so hard on the top part I don’t want to delete it. I=prt Interest = principal * rate * timeI= 5000(0.023)(3)=345Then just do the same but plug 55.2 for I55.2 = 345(0.032)t Now solve for t 55.2 = 11.04tt= 5

Explanation:

As you can see, similar logic where ultimately it takes 5 years. But this “genius” Ronisha should’ve just done compounding interest (my first calculation) and gotten it done in 4.6 years. Almost 5 months faster.

User Sandeep PC
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