SOLUTION: David needs $25,000 in 8 years. He currently has $15,000. At what simple interest rate must he invest to get exactly $25.000?

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Question 1056826: David needs $25,000 in 8 years. He currently has $15,000. At what simple interest rate must he invest to get exactly $25.000?
Answer by math_helper(2461) About Me  (Show Source):
You can put this solution on YOUR website!
The simple interest formula will suffice

+F+=+P+%28+1+%2B+rt+%29+
where
F = future value of investment
P = present value of investment
r = interest rate
t = number of periods
In this problem F=25000, t=8yrs, and P=15000. The problem asks us to find the rate r.
25000 = 15000(1 + r*8)
25000/15000 = (1 + r*8)
25/15 - 1 = r*8
10/15 = r*8
10/(15 * 8) = r
r = 0.08333… ( 8.33333... % )