SOLUTION: How long will it take the sum of $1250 to grow to $10000 if it is invested 12.5% p.a simple interest

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Question 1193425: How long will it take the sum of $1250 to grow to $10000 if it is invested 12.5% p.a simple interest
Answer by math_helper(2461) About Me  (Show Source):
You can put this solution on YOUR website!


+F+=+P%281%2Br%2At%29+



10000 = 1250(1+0.125t)

7 = 0.125t

t = 7/0.125 = +highlight%28+56+%29+ yrs



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Side note:



A good opportunity to show why compounding interest is so powerful.  If the interest is compounded (even if just once per year), you get this:



   ++F+=+P%281%2Br%2Fn%29%5E%28nt%29+

   +10000+=+1250%281%2B0.125%2F1%29%5E%281%2At%29+

   ++++8+=+1.125%5Et+

   +ln%288%29+=+t%2Aln%281.125%29+

   +++t+=+ln%288%29%2Fln%281.125%29+

   +++t+=+17.65+ years   (less than one third the time of simple interest)