Joe deposits $50,000.00 in an account that earns 8.3% simple interest. About how many years will it take for his account balance to earn $80,000.00 in interest?

Select the best answer from the choices provided.

About 5 years

About 10 years

About 20 years

About 25 years

The answer is about 5 years

T = 7.23 years (either 5 or 10, you choose)

Equation:

t = (1/r) (A/P - 1)

Calculation:

First, converting R percent to r a decimal

r = R/100 = 8.3%/100 = 0.083 per year,

then, solving our equation

t = (1/0.083) ((80000/50000) - 1) = 7.23

t = 7.23 years

The time required to get

a total amount, principal plus interest, of $ 80,000.00

from simple interest on a principal of $ 50,000.00

at an interest rate of 8.3% per year

is 7.23 years (about 7 years 3 months).