Question

The Garzas plan to invest $2,000 for 5 years. What annual simple interest rate must the investment earn in order for the Garzas to double their money?

Answer 1

Answer:

r=20%

Step-by-step explanation:

we know that

The simple interest formula is equal to

$A=P(1+rt)$

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest  

t is Number of Time Periods

in this problem we have

$t=5\ years\\ P=\ 2,000\\ A=\ 4,000\\r=?$

substitute in the formula above

$4,000=2,000(1+5r)$

solve for r

$2=(1+5r)$

$5r=2-1\\5r=1\\r=\frac{1}{5}=0.20=20\%$