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Answered

Suppose you invest $5,000 at 4% annual interest. How many years would it take for your investment to be worth $10,000? Round your answer to the nearest hundredth (2 places after the decimal).

Answer :

Given:

Principal Amount , P = $ 5,000

Interest Rate, r = 0.04 = 4%

Final Value of the Investment , A = $ 10,000

Required: time it will take for the investment to be worth $10, 000, t = ?

Solution:

Assume Simple Interest.

[tex]\begin{gathered} A=P(1+rt) \\ 10000=5000(1+0.04t) \\ \frac{10000}{5000}=\frac{5000(1+0.04t)}{5000} \\ 2=1+0.04t \\ 2-1=0.04t \\ 1=0.04t \\ t=\frac{1}{0.04} \\ t=25 \end{gathered}[/tex]

Answer: t = 25 years

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