Question

You deposit $5000 in an account earning 7.5% simple interest. How long will it take for the balance of the account to be $6500?

Answer 1

Hi there! So, the simple interest is 7.5% annually. Let’s multiply by initial amount by the interest rate. 5,000 * 7.5% is 375. You earn $375 in interest annually. The difference of 6,500 and 5,000 is 1,500. Let’s divide by 375 to see how many times it goes into 1,500. 1,500/375 is 4. It will take 4 years for the balance of the account to be $6,500.