Question

If the interest of your invesment at 12 percent in 3 months is 2000.00, determine the ordinary simple interest and future worth in 8 years, 8 months, 8 days invested at the same rate

Answer 1

Given the annual interest rate(r) = 12%

time(t) = 3 months = 3/12 year = 1/4 year

and also given that simple interst of the investment is 2000.00 for 3 months period.

let us suppose if P is the amount of investment ,

So we have, simple interest (S.I) = (P* t * r) /100

thus ,P =( SI *100)/(t* r) =( 2000*100)/((1/4 )*12) = 66,666.66667

now we the amount invested is equal to p= 66,666.66667

we want to find ordinary simple interest of 8 years 8 months and 8 days .

so lets convert them in days  so , time(T) =( 8 *365 + 8* 30 + 8 ) days = 3168 days. = 3168/365= 8.6794 years.

now simple interst of 66,666.66667 for 8.6794 years with rate of intest 12% is given by,

SI =( 66,666.66667*8.6794 * 12)/ 100

= 69,435.2

Future worth after 8 years 8 month and 8 days of investment is denoted by,

Future worth = Amount invested + interest earned on investment = 66,666.66667 +69435.2 = 136,101.8667

note :taking one year= 365 days and one month = 30 days

we can also round off value upto two decimals also but here all decimal points is considered.