Simple Interest: Number of Years

In summary: To find the number of years it will take for the cumulative value of the interest to equal the original investment, you have to set up an equation and solve for t. In summary, to find the number of years it takes for the cumulative interest to equal the original investment, you need to use the formula V = Prt and solve for t. Setting up an equation and solving for t will give you the answer.
  • #1
zak100
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Homework Statement


An investment is made at 12.5% annual simple interest. Find the number of years it will take for the cumulative value of the interest to equal the original investment?

Homework Equations


V=P(1+rt)
Where V= interest on Amount
P = Principal amount
r= interest rate
t= number of years for which amount is invested

The Attempt at a Solution


Simple Interest formula is:

V=P(1+rt) Let p =10 & t=1

V= 10(1+12.5) = 135In just one year the interest obtained is more than the Principal value. Some body please guide me. What I understand is that, I have to find the number of years in which the interest obtained & added (with previous years’ interest becomes equal to the Principal).

Zulfi.
 
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  • #2
r is 12.5%, which is 0.125, not 12.5.
 
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  • #3
zak100 said:

Homework Statement


An investment is made at 12.5% annual simple interest. Find the number of years it will take for the cumulative value of the interest to equal the original investment?

Homework Equations


V=P(1+rt)
Where V= interest on Amount
P = Principal amount
r= interest rate
t= number of years for which amount is invested

The Attempt at a Solution


Simple Interest formula is:

V=P(1+rt) Let p =10 & t=1

V= 10(1+12.5) = 135In just one year the interest obtained is more than the Principal value. Some body please guide me. What I understand is that, I have to find the number of years in which the interest obtained & added (with previous years’ interest becomes equal to the Principal).

Zulfi.

Your formula for the interest is wrong: interest = Prt, NOT P(1+rt).
 

1. What is simple interest and how is it calculated?

Simple interest is a type of interest that is calculated based on the original principal amount of a loan or investment. It is calculated by multiplying the principal amount by the interest rate and the number of years.

2. What does the term "number of years" mean in relation to simple interest?

The number of years in simple interest refers to the amount of time that the loan or investment will accrue interest. This can also be referred to as the term or duration of the loan or investment.

3. Is the number of years the same as the maturity date?

No, the number of years and maturity date are not the same. The maturity date is the date on which the loan or investment will be fully paid off, while the number of years refers to the amount of time that interest is accruing.

4. How does the number of years affect the total amount of interest paid?

The longer the number of years, the more interest will be accrued on the loan or investment. This is because the longer the duration, the more time the interest has to compound, resulting in a higher total amount of interest paid.

5. Can the number of years be changed in the middle of a loan or investment?

No, the number of years is determined at the beginning of the loan or investment and cannot be changed in the middle. However, some loans or investments may allow for early payment or withdrawal, which can shorten the number of years and decrease the total amount of interest paid.

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