Question

What annual simple interest rate will allow Hosea Soli to increase his initial investment of $80,000 to $100,000 in five years?

Answer 1

An increase from $80,000 to $100,000 is how much of an increase?

Answer 2

20,000 @mathstudent55

Answer 3

Great.
This increase of $20,000 will take place over a 5 year period. How much of an increase is it per year?

Answer 4

4000? @mathstudent55

Answer 5

Correct again.
One more step.

Answer 6

Now you need to find: what percent of $80,000 is $4000?

Answer 7

$80,000 is the whole so it corresoponds to 100%.
$4000 is the part, so it corresponds to x, since we don't know it.
We can use a proportion.
80000 is to 100% as 4000 is to x%.

\( \dfrac{80000}{100} = \dfrac{4000}{x} \)

Now you can cross multiply and solve for x.

Answer 8

Okay. So I got 2. @mathstudent55

Answer 9

2?
80000x = 4000 * 100
The answer is not 2.

Answer 10

oops. I did 400 not 4000. @mathstudent55

Answer 11

kay. Now i got 5 @mathstudent55

Answer 12

That's better. That's correct.

Now we can check.
Find 5% of $80,000: 5% * $80,000 = 0.05 * $80,000 = $4,000
Multiply that amount by 5 (5 years): $4000 * 5 = $20,000
That is the increase that we calculated, so it's correct.
The answer is 5%.

Answer 13

Yay! You're awesome. Thank you!@mathstudent55

Answer 14

Thanks. You're welcome.