An investment club invested $5000 at 2.5% interest and was able to earn $1200. Approximately how many years did this take?
Responses
A8
8
B10
10
C12
12
D14
To find the number of years it took for the investment club to earn $1200 at 2.5% interest, we can use the formula for simple interest:
Simple Interest = Principal x Rate x Time
Where:
- Principal is the initial investment of $5000
- Rate is the interest rate of 2.5% (expressed as a decimal, so 2.5% = 0.025)
- Time is the unknown we need to find
Substituting in the given values, we have:
$1200 = $5000 x 0.025 x Time
Simplifying:
$1200 = $125 x Time
Dividing both sides by $125:
$1200/$125 = Time
Time ≈ 9.6 years
Rounding to the nearest whole number, we can say that approximately it took 10 years for the investment club to earn $1200.
Therefore, the answer is B) 10.