Question

Gustaf wants to earn $3,000 simple interest on a $9,000 investment with an annual simple interest rate of 2.5%. How long should Gustaf plan to invest his money?

Answer 1

Explanation:

Let's take out our given data :

P = $9000

Interests = $3000

A will be the investment plus the interests

A = $9000 + $3000 = $12000

i = 2.5% = 2.5/100

n =?

Now we can use our simple interest formula to calculate how many years should the money be invested in order to gain that amount of interests

A = P( 1+ in)

A/P - 1 = in

Dividing both sides by i we will have :

(A/P - 1) / i = n

n = (12000/9000 - 1)÷(2.5/100)

n = 13.3333

Since these are years we cannot round back

n = 14 years