Financing Word Problem - HELP!

Question

an investment of $1500 earned $35.20 at a simple-interest rate of 5.5% per year. How long was the investment held?

Answer 1

The formula for simple interest is I = PRT. Interest equals principle times rate times time.

$1500 is the initial investment so that would be your principle.

$32.50 is the interest that was earned so that would be the I in the equation.

5.5% is the rate, but you would need to take it out of percentage format, which means moving the decimal two places to the left because it is a percentage out of 100 (100 has two zeroes).

 

Your equation should look like:

 

32.50 = 1500*.055*T (t for time since that is what they are asking for). Then you would solve for T.

Answer 2

Hello, thank you for taking the time to post your question!

This question is based on simple interest, meaning

Interest = Principal x Rate x Time

Plugging in the values we know from the question it becomes

35.20 = 1500 x 0.055 x Time   because the Interest is given at $35.30, Principal = $1500, and Rate = 5.5% = 0.055

From there then you just want to solve for the value of Time algebraically

Time = 35.20 / (1500 x 0.055) = 0.43 years

So the investment was held for 0.43 years, or about 5.12 months in order to generate this much interest

I hope that helps get you moving in a better direction on this type of question! Feel free to reach out if you have any additional questions beyond that :)