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:
[tex]S.I = \frac{pnr}{100}[/tex]
Where, "p" is the principal
"n" is the number of years
"r" is the rate of interest
Substituting the values in formula, we get
[tex]5000 = \frac{25000 \times n \times 5}{100}\\\\5000 = 250 \times n \times 5\\\\n = \frac{5000}{250 \times 5}\\\\n = 4[/tex]
Thus it takes 4 years for a principal of $25,000 at a simple interest rate of 5% to become 30,000
