Question

If you invest $8,600 at a 3.95% simple annual interest rate, approximately how long will it take for you to have a total of $21,000?
a.
25.3 years
b.
36.5 years
c.
45.9 years
d.
60.7 years

Answer 1

Use simple interest A = P(1 + rt). Solve for t:

t = (A/P − 1)/r = (21,000/8,600 − 1)/0.0395
= (2.441860 − 1)/0.0395 ≈ 1.441860/0.0395 ≈ 36.5 years.

Answer: b.