Question

How long does it take a principal of $25,000 at a simple interest rate of 5% to become 30,000? Show all work

Answer 1

It takes 4 years for a principal of $25,000 at a simple interest rate of 5% to become 30,000

Solution:

Given that:

principal = $ 25000

rate of interest = 5 %

Total amount = $ 30000

Number of years = ?

Formula used:

Total amount = principal + Simple interest

30000 = 25000 + Simple interest

Simple interest = 30000 - 25000

Simple Interest = $ 5000

The simple interest is given as:

$S.I = \frac{pnr}{100}$

Where, "p" is the principal

"n" is the number of years

"r" is the rate of interest

Substituting the values in formula, we get

$5000 = \frac{25000 \times n \times 5}{100}\\\\5000 = 250 \times n \times 5\\\\n = \frac{5000}{250 \times 5}\\\\n = 4$

Thus it takes 4 years for a principal of $25,000 at a simple interest rate of 5% to become 30,000