How long will it take to earn $252 in interest if $1200 is invested at a 7% annual interest rate??
If the interest it withdrawn annually and not compounded, the number of years T is given by
1200*0.07*T = 252
T = 252/[(0.07)(1200)] = 3.0 years
If the interest is compounded (lefgt in the account), it will take a bit less time, but the formula to use is quite different.
I believe they expect you to assume interest is withdrawn each year.
You deposited $1200 dollars in a savings account that earns a simple interest rate of 3% per year. How many years do you need to keep the money in the account to earn $252 in interest?
To calculate the time it takes to earn a specific amount of interest, we need to use the formula for simple interest:
Interest = Principal × Rate × Time
From the given information, we know:
- Principal (P) = $1200
- Rate (R) = 7% or 0.07
- Interest (I) = $252
Let's plug in the values and solve for Time (T):
$252 = $1200 × 0.07 × T
Divide both sides of the equation by ($1200 × 0.07):
T = $252 / ($1200 × 0.07)
T ≈ 3 years
Therefore, it will take approximately 3 years to earn $252 in interest when $1200 is invested at a 7% annual interest rate.
To calculate the time it will take to earn a specific amount of interest, we can use the formula for calculating simple interest:
I = P * r * t
Where:
- I is the amount of interest earned
- P is the principal amount (initial investment)
- r is the interest rate per period
- t is the time period in years
In this case, we have an initial investment of $1200 and an annual interest rate of 7%. We want to find the time period required to earn $252 in interest.
Let's plug in the values into the formula:
252 = 1200 * 0.07 * t
Now we can solve for t:
t = 252 / (1200 * 0.07)
t = 3
Therefore, it will take 3 years to earn $252 in interest with a $1200 investment at a 7% annual interest rate.