Question

Ellie wants to double her savings of £8000 by investing her money for 16 years.

Answer 1

Answer:

She need a interest rate of 6.25%

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

$t=16\ years\\ P=\£8,000\\ A=\£8,000*2=\£16,000\\r=?$

substitute in the formula above  and solve for r

$16,000=8,000(1+16r)$

$16r=2-1$

$r=1/16$

$r=0.0625$

Convert to percentage

$r=0.0625*100=6.25\%$