Question

You want to save $10,000 to buy a new car. You deposit $6500 in an account earning 7.5% simple interest. After how long will you have enough money in the account to purchase the car? Round your answer to the nearest whole number.

Answer 1

After 7.5 years we will have enough money in the account to purchase the car.

Explanation:

Amount needed to be saved = $10000

Principal = $6500

So, Simple Interest = $3500

Rate of Interest = 7.5%

= 0.075

Now, Simple Interest = Principal × Rate × Time

⇒ 3500 = 6500 × 0.075 × Time

⇒ 3500 = 487.5 × Time

⇒ Time = 7.18 years ≈ 7.5 years

Hence, after 7.5 years we will have enough money in the account to purchase the car.