Question

If you invest $3,900 at a 7.83% simple annual interest rate, approximately how long will it take for you to have a total of $10,000?
a.
12 years
b.
15 years
c.
20 years
d.
30 years

Answer 1

Use simple interest A = P(1 + rt). Solve for t:
t = (A/P − 1)/r = (10000/3900 − 1)/0.0783 ≈ (2.5641 − 1)/0.0783 ≈ 1.5641/0.0783 ≈ 20 years.

Answer: c. 20 years.