How long will it take for an investment of $5000 to double if it is invested at 5% p.a. simple interest?
Been stuck on this and need help thanks
So the interest on your $5000 should amount to $5000
5000(.05)t = 5000
t = 1/.05 = 20
or,
interest for 1 year = 5000(.05)(1) = $250
Since that stays constant (simple interest),
it would take 5000/250 or 20 years
To calculate the time it will take for an investment to double with simple interest, we can use the formula:
Time (in years) = (2 * Principal) / (Rate * Principal)
In this case, the principal (P) is $5000 and the rate (r) is 5% p.a. (per annum).
Let's substitute these values into the formula:
Time (in years) = (2 * $5000) / (0.05 * $5000)
Simplifying the equation:
Time (in years) = 2 / 0.05
Time (in years) = 40
Therefore, it will take 40 years for an investment of $5000 to double at a 5% p.a. simple interest rate.