Question

18,000 amounts to 21,600 in 4 years at simple interest. Find the sum of

Answer 1

Answer:

$\ 20,400$

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

step 1

Find the rate of interest

in this problem we have

$t=4\ years\\ P=\ 18,000\\ A=\ 21,600\\r=?$

substitute in the formula above and solve for r

$\ 21,600=\ 18,000(1+4r)$

$1.2=(1+4r)$

$4r=1.2-1$

$r=0.2/4=0.05$

The rate of interest is $5\%$

step 2

Find the sum of  money that will amount to 25,500 in 5 years, at the same rate of interest

in this part we have

$t=5\ years\\ P=?\\ A=\ 25,500\\r=0.05$

substitute in the formula above and solve for P

$\ 25,500=P(1+0.05*5)$

$P=\ 25,500/(1.25)=\ 20,400$